Wachovia quarter loss lowers stocks
NEW YORK » Stocks finished a quiet session moderately lower yesterday as investors grappled with concerns about the health of corporate profits after Wachovia Corp.
posted disappointing quarterly results.
Investors paused following a sell-off Friday and ahead of a raft of quarterly results and economic data arriving this week.
Wachovia surprised investors by posting a first-quarter loss of $393 million and cutting its quarterly dividend by 41 percent to 37.5 cents. The bank, which analysts had expected to post a profit, also said it plans to raise $7 billion through a stock offering.
But investors appeared to find some encouragement in the session from a better-than-expected report on retail sales. The Commerce Department's reading on March retail sales, which showed a modest 0.2 percent rise following February's 0.6 percent decline, appeared to quell some unease about the economy. The March figure bested the flat reading analysts had predicted. Excluding a 1.1 percent rise at gasoline service stations, retail sales would have been flat last month -- and possibly negative when adjusted for inflation.
"We obviously came out with more bad financial news," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, referring to the Wachovia report. "The flip side is we had retail sales come in a little better than expected. It seems like they kind of negated each other."
Investors sold off shares of financials, led by Wachovia, which fell $2.26, or 8 percent, to $25.55. Citigroup Inc., which is due to report its quarterly results Friday, fell 85 cents, or 3.6 percent, to $22.51.
The Dow Jones industrial average fell 23.36, or 0.19 percent, to 12,302.06.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 4.51, or 0.34 percent, to 1,328.32, and the technology-laden Nasdaq composite index fell 14.42, or 0.63 percent, to 2,275.82. The Russell 2000 index of smaller companies fell 2.09, or 0.30 percent, to 686.07.
Declining issues outpaced advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.42 billion shares, compared with 3.59 billion shares traded Friday.
Bond prices edged lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.51 percent in late trading from 3.48 percent late Friday.
Light, sweet crude rose $1.62 to settle at a record $111.76 per barrel as the dollar fell, helping drive prices higher.
Gold prices turned higher, and the dollar was mixed against other major currencies.
In dealmaking news, Blockbuster Inc. said it is taking an unsolicited $1 billion-plus bid for Circuit City Stores Inc. directly to shareholders. Blockbuster said the consumer electronics chain has dragged out a deal that has been under negotiations for months. Circuit City jumped $1.07, or 27 percent, to $4.97, while Blockbuster fell 32 cents, or 10 percent, to $2.81.
And in a sign that the slumping U.S. economy is hurting companies overseas, Royal Philips Electronics reported a sharp drop in first-quarter profits as a decrease in television sales in North America offset growth in its health care and lighting businesses.