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Despite upbeat news,
investors cash out
NEW YORK >> Investors intent on collecting profits from Friday's big gains looked past a series of positive earnings reports yesterday, sending blue chip stocks moderately lower. The falling dollar and rising price of oil contributed to the selling.
"This is the classic 'buy the rumor, sell the news' market," said Russ Koesterich, U.S. equity strategist for State Street Corp. "A lot of the stocks that reported today have already had huge runs. They beat estimates, yes, but not so much that they're being bid higher."
Yesterday's selling could foreshadow the next few weeks, even as most analysts expect total quarterly earnings to rise 20 percent over last year, according to Michael Murphy, head trader at Wachovia Securities in Baltimore.
"I think the market's still in an uptrend," Murphy said. "It's just a little correction here, and it's healthy."
The Dow Jones industrial average closed down 71.85, or 0.7 percent, at 10,528.66.
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 1.06, or 0.1 percent, at 1,138.77, while the Nasdaq composite index closed up 7.52, or 0.4 percent, at 2,147.98.
While earnings were foremost on investors' minds, the rising price of oil and a continuing slide in the dollar entered into some sellers' thoughts, according to Scott Wren, equity strategist for A.G. Edwards & Sons.
Prices for light, sweet crude closed up $1.13 at $36.20 a barrel, the highest price since before the Iraq war began, on the New York Mercantile Exchange.
"The market is pretty close to fair value as is," Wren said. "The dollar's a little weaker, and you have oil that could hit $40 a barrel. That's part of the reason why you'll see some churn in the next few weeks along with the earnings."
With earnings season now under way, General Motors Corp. reported profits of $1.47 per share, easily beating the $1.22 expected by Wall Street analysts. Its stock dropped 20 cents to close at $53.87.
Citigroup led the banking sector, posting profits 96 percent higher from a year ago and beating estimates by a penny. Citigroup closed down 21 cents at $49.29.
Bank One Inc., fresh off last week's announcement of its merger with J.P. Morgan Chase, beat estimates by 7 cents per share despite a slight falloff in revenues. The company also announced it would purchase Circuit City Stores Inc.'s credit card imprint. Bank One slipped 13 cents to $50.87.
The Nasdaq received a boost from technology stocks, especially networking equipment makers and wireless companies. AT&T Wireless Services Inc. jumped 40 cents to $10.39 as Cingular Wireless made an official bid for the company.
The price of the Treasury's 10-year note closed down 5/32 point, while its yield rose to 4.05 percent from 4.02 percent Friday. Financial markets were closed Monday for the Martin Luther King Jr. holiday. Two-year Treasury notes gained 1/32 point and yielded 1.65 percent, down from 1.67 percent Friday.
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