Dow drops 200 points as investors pull back
NEW YORK » Wall Street pulled back sharply yesterday as investors dealt with disappointing earnings reports and renewed concerns about the mortgage lending market. The Dow Jones industrials fell more than 200 points.
DuPont Co. was the Dow's biggest loser after the chemical maker reported its second-quarter profit growth was flat, as improving sales abroad balanced the ongoing weakness in the U.S. housing and automotive markets.
Fellow Dow component American Express Co. said late Monday its quarterly profit climbed 12 percent on record card member spending. However, the nation's third-largest credit card brand said cardholders are also shirking more payments.
A profit warning from mortgage lender Countrywide Financial Corp. yesterday reminded investors that troubles in the subprime market persist.
The Dow gave up 226.47, or 1.62 percent, to 13,716.95.
Other major stock indicators also suffered steep declines. The Standard & Poor's 500 index shed 30.53, or 1.98 percent, to 1,511.04. The Nasdaq composite index lost 50.72, or 1.89 percent, closing at 2,639.86.
The Russell 2000 index of smaller companies dipped 23.76, or 2.84 percent, to 811.86.
Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where volume came to almost 2 billion shares, compared with 1.52 billion on Monday.
Light, sweet crude gave up $1.33 to end at $73.56 on the Nymex. Gasoline futures fell.
The steady flow of earnings reports dictated Wall Street's direction yesterday, after five back-and-forth sessions that saw markets rise one day only to fall the next.
DuPont and American Express both sank after their earnings reports. DuPont tumbled $3.36, or 6.3 percent, to $49.90, while American Express dropped $3.49, or 5.4 percent, to $61.17.
McDonald's Corp., the world's largest restaurant chain, posted a loss after taking a charge for the sale of its Latin American outlets. Excluding that charge, it reported earnings per share that matched Wall Street expectations. The Dow stock fell 95 cents to $51.55.
AT&T reported a 61 percent increase in second-quarter earnings, lifted primarily by its buyout of BellSouth Corp. At the same time, the telecommunications company reported fewer activations of Apple Inc.'s iPhone than analysts expected when the much-touted device debuted just before the quarter's end.
AT&T shares fell 35 cents to $39.68, while Apple's stock dropped $8.81, or 6.1 percent, to $134.89. Apple is scheduled to report quarterly results today.
Countrywide Financial posted sharply lower second-quarter profit and slashed its earnings forecast as mortgage banking earnings were cut in half. Its shares declined $3.56, or 10.5 percent, to $30.50.
The largest U.S. mortgage lender is used as one of the barometers of the housing industry, which has continued to slump amid delinquencies and defaults in subprime loans, or those made to borrowers with weak credit.
In other corporate news, Texas Instruments Inc. said late Monday that profit fell from a year ago which was boosted by one-time gains. The largest supplier of chips used in mobile phones saw its shares lose $1.72, or 4.5 percent, to $36.46.