NEW YORK >> Earnings warnings from companies including Philip Morris and Delta Air Lines sent stocks tumbling today, canceling out gains from a two-day rally in blue chips. The Dow Jones industrials plunged 295 points.
Stocks fall on
By Adam Geller
Scaled-back profit forecasts for several high-profile companies discouraged investors, stifling the market's ability to sustain its rally and leading portfolio managers to dump losing stocks, analysts said. Lackluster economic news also helped depress the market.
"Looking back at those two days of gains, no brave new world was created. We still had concerns about a war with Iraq, we still had earnings warnings," said Bryan Piskorowski, market commentator at Prudential Securities.
"So once the bargain-hunting stopped, we were back to where we were," he said. "Then (the declines) begin to snowball and no one is willing to be a hero," he said.
Declining issues outnumbered advancers 10 to 3 on the New York Stock Exchange. Volume was moderate.
The Dow fell 295.67, or 3.7 percent, to close at 7,701.45. The drop all but erased the average's 314-point gain over the previous two sessions.
Broader stock indicators also finished lower. The Nasdaq composite index fell 22.46, or 1.8 percent, to 1,199.15. The Standard & Poor's 500 index fell 27.59, or 3.2 percent, to 827.36. The Russell 2000 index fell 8.92 points, or 2.4 percent, to 361.77.
The three major market gauges all finished the week lower for a fifth straight week, a distinction not seen since the five weeks ending May 24 to June 21. For the week, the Dow lost 3.6 percent, the Nasdaq declined 1.8 percent, and the S&P fell 2.1 percent.
The price of the Treasury's 10-year note was up 3/4 point today, while its yield fell to 3.67 percent from 3.78 percent late yesterday. Two-year Treasury notes were up 1/4 point and yielded 1.80 percent, down from 1.94 percent yesterday.
Analysts said some of today's declines may be a result of "window-dressing," or an attempt by institutional investors to make their holdings look as good as possible at a quarter's end. The fact that two economic reports released today offered little reassurance of a strengthening economy added to the losses.
The Commerce Department reported that the economy grew at an annual rate of 1.3 percent in the spring, slightly better than previous estimates but significantly weaker than in the first quarter of the year.
In addition, a University of Michigan survey released today also reportedly showed consumer confidence declining during September, according to Dow Jones News Service.
The reports, while not a surprise, confirmed doubts among investors that the economic recovery is shaky, analysts said.
"None of the recent data ... suggests that we have a strong economic turning point here," said Chris Wolfe, equity strategist for the J.P. Morgan private bank. "The presumption ... is that consumer spending is set to slow down."
General Electric fell $1.92 to $24.47 after a pair of analysts downgraded the company's stock.
Philip Morris fell $4.87 to $37.86, after it warned late Thursday that its full-year earnings would fall short of expectations.
Delta Air Lines shares fell $2.81 to $8.69 after the company warned that its third quarter results would be weaker than previous estimates.
SBC Communications fell $1.75 to $20.15 following the company's announcement that it will cut another 11,000 jobs and slash capital spending.
Citigroup fell 49 cents to $29.02 after reports that it is trying to reach a settlement with federal regulators that would end investigations of its stock research operations.
Japan's Nikkei stock average rose 2.3 percent. In Europe, Germany's DAX index fell 3.4 percent, France's CAC-40 fell 0.4 percent, and Britain's FTSE 100 rose 1.5 percent.