NEW YORK (CNNfn) - The Dow's retreat from 10,000 continued Wednesday, with stocks drifting lower as investors worried about valuations and the upcoming first-quarter earnings reports.
The Dow Jones industrial average lost 51.06 points to close at 9,879.41. On the New York Stock Exchange, declines led advances 1,608 to 1,359 as 755 million shares traded.
The Nasdaq Composite fell 10.30 to 2,428.97 and the S&P 500 index lost 8.54 to 1,297.82.
The proximity of the first-quarter earnings reporting season is likely to keep the Dow from making a meaningful attack on 10,000 in the immediate future, as investors remain edgy about companies that come forward to issues profit warnings, said Greg Smith, chief strategist at Prudential Securities. However, once the pre-announcing hurdle has been cleared, Smith expects the Dow to conquer 10,000 and remain above it. (432K WAV) or (432K AIFF)
Market watchers predicted more volatility and a shaky trading pattern between now and Friday, when Wall Street faces this quarter's 'triple witching' hour -- the simultaneous expiration of stock and stock index futures and options.
The bond market fell as the dollar dropped against the euro and eased from its overnight highs against the yen. The bellwether 30-year Treasury bond was down 12/32 of a point in price, for a yield of 5.50 percent.
Wall Street retreats
Back in stocks, investors found little corporate news to trade on, and left the market consolidating after Tuesday's brief peak above 10,000 for the Dow.
Among the day's few newsmakers, shares of local and long-distance telephone service provider Frontier (FRO) surged 5-7/8, or more than 13 percent, to 50-1/2 on news Global Crossing (GBLX), a telecommunications network operator, is buying the company for $11.2 billion. Global Crossing's stock lost 4-3/8 to 47-1/8.
And the stock of fast-food restaurant chain Wendy's (WEN) rose 2 to 29-1/4 after the company said it would exceed first-quarter earnings estimates by 2-3 cents a share.
Shares of Dollar Thrifty Automotive (DTG) climbed 2-3/8, or more than 19 percent, to 14-9/16 after the budget rental car operator also said it would more than double forecasts with its first-quarter earnings.
Dow weighed down by financials
Weakness among financial stocks dragged down the Dow industrials, extending the sector's losses from Tuesday.
Among the losers, shares of American Express (AXP) dropped 2-5/8 to 120-15/16, J.P. Morgan (JPM) lost 2-1/2 to 121-1/2 and Citigroup (C) was down 1-3/4 to 62-3/4 even after Lehman Brothers raised its earnings estimates for several major banks, including J.P. Morgan and Citigroup.
Helping limit the Dow's losses, shares of construction equipment maker Caterpillar (CAT) jumped 3-1/4 to 47-1/4 after Salomon Smith Barney upgraded the stock to "buy" from "neutral," even after Caterpillar issued a profit warning last week.
Also moving on the upside, AT&T (T) gained 1-3/8 to 83-13/16 after the company announced a 3-for-2 stock split.
Transports slowed down
Transportation stocks, which recently rallied sharply, also succumbed to profit taking, leading the Dow transports index to lose 51.77 points, or 1.5 percent, to 3,336.79. Renewed gains in world oil prices also helped keep the transportation sector in the minus column.
Among the major losers, shares of AMR (AMR), which operates American Airlines, shed 3-1/2 to 57-1/2. Shortly after the closing bell the company said its first-quarter profits will fall below expectations, largely because of a weeklong pilot strike in February. AMR also announced plans to buy back $300 million of its stock.
Delta Air Lines (DAL) fell 1/2 to 66-1/4. But UAL (UAL), which operates United Airlines and which Monday said it would beat earnings estimates because of the AMR strike, gained 13/16 to 74.
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-- by staff writer Malina Poshtova Zang
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