NEW YORK (CNNfn) - U.S. stocks closed modestly lower Tuesday after another round of disappointing financial news delayed some of the hopes for an earnings recovery later this year.
In a shortened, pre-holiday trading session, chemical maker DuPont, retailer Payless ShoeSource and software firm Broadvision joined more than two dozen companies pre-announcing shortfalls in the last 24 hours.
The news reminded investors that the June quarter could be the worst period for profits in a decade.
"The only shoe that still has to drop is the earnings picture, and I think second-quarter earnings are going to be bad," Frank La Salla, president of BNY Clearing told CNNfn's Market Call. "We're going to get a slew of that and I think that`s got the market...a little bit more defensive."
Tuesday marked the six-month anniversary of the Federal Reserve's first interest rate cut in more than two years. After Jan. 3, central bankers lowered rates five more times, cheapening borrowing costs to levels not seen since 1994 and lifting hopes for an earnings turnaround.
"I think we are set up and ready to go for a summer rally," Stuart Freeman, chief equity strategist at A.G. Edwards, told CNNfn's Before Hours.
But that will have to wait. The Nasdaq composite index on Tuesday fell 7.92 points, or 0.4 percent, to 2,140.80, widening its 2001 loss to 13.4 percent.
The Dow Jones industrial average slid 22.61, or 0.2 percent, to 10,571.11 and is down 2 percent in 2001. Off 6.5 percent on the year, the S&P 500 dipped 2.27, or 0.2 percent, to 1,234.45.
U.S. stock markets closed at 1 p.m. ET Tuesday ahead of Wednesday's Independence Day holiday. Trading resumes Thursday.
Market breadth was mixed. On the New York Stock Exchange, advancing issues topped declining ones 1,592 to 1,357 as 622 million shares traded. Nasdaq losers beat winners 1,851 to 1,596 as 891 million shares changed hands.
In other markets, the dollar edged higher against the euro and yen. Treasury securities fell.
Big day for shortfalls
Most of the session's disappointments came from technology firms, whose more expensive stock prices make them prone to big selloffs. One company, Internet Security Systems (ISSX: down $20.18 to $29.99, Research, Estimates) , saw its market value cut by 40 percent after warning it would lose as much as 2 cents per share in the latest quarter. The company earlier said it would post a profit.
| |
 MONEY.COM
|
|
| |
|
Columnist Michael Sivy picks his stocks for long-term growth.
click here
|
|
|
DuPont (DD: down $0.92 to $47.20, Research, Estimates) said its second-quarter profit could come in as much as 34 percent below Wall Street forecasts, one day after fellow Dow Jones industrial average component 3M (MMM: down $0.43 to $116.83, Research, Estimates) issued a warning of its own.
Broadvision (BVSN: down $0.89 to $4.04, Research, Estimates) , a software maker, said its losses would widen beyond expectations, and Rational Software (RATL: down $5.33 to $22.12, Research, Estimates) warned that profit and sales would miss forecasts.
But it wasn't just technology companies facing problems. Payless ShoeSource (PSS: down $7.63 to $56.95, Research, Estimates) became the second-biggest loser on the NYSE after the retailer warned that quarter and full-year profits would fall short.
Click here for a comprehensive look at other warnings
.
Still, the day had some notable gainers. Qualcomm (QCON: Research, Estimates) rallied after the company expanded a cross-licensing agreement with Nokia (NOK: down $0.20 to $22.20, Research, Estimates) covering wireless systems.
Let's not make a deal
Honeywell (HON: up $0.99 to $35.10, Research, Estimates) shares also rose, becoming one of the biggest gainers among the Dow industrials. The European Commission rejected General Electric's (GE: down $0.69 to $49.51, Research, Estimates) planned $41 billion purchase of the conglomerate, which now could be open to other suitors.
With GE out of the picture, United Technologies (UTX: up $1.87 to $72.95, Research, Estimates) is seen as a possible buyer of Honeywell.
The market's losses came amid more signs that the U.S. economy is at least stabilizing. Factory orders rose 2.5 percent in May, the government said. That's well above expectations of economists surveyed by Briefing.com, who forecast a 1.5 percent increase.
On Monday, data on manufacturing, consumer and construction spending all showed surprising strength.
OPEC, meeting in Vienna, Austria, said it will make no changes in oil production. While light sweet crude oil futures rose Tuesday, energy prices have fallen in recent months. Many economists expect this drop, by reducing costs, to help spur a U.S. recovery.
In addition, taxpayers will receive checks beginning this month that reflect the federal income tax cut President Bush signed into law, potentially injecting billions of dollars into the economy.
"The tax rebate checks are all but in the mail," Tom McManus, stock market strategist at Banc of America Securities, told CNNfn's Street Sweep. 
|
