NEW YORK >> Wall Street's huge comeback ended abruptly today when a new set of earnings warnings, a weak economic report and a major utility's bankruptcy filing shattered investors' optimism. Wall Street’s rally
proves short-livedBy Seth Sutel
Associated PressThe Dow Jones industrial average fell 126.96 to close at 9,791.09. Yesterday, the index scored its second-largest daily point gain, rising 402.63 after positive earnings news from Dell and Alcoa led to a powerful rally.
"Investors generally are shellshocked," said Charles Pradilla, chief investment strategist at SG Cowen. "They are reluctant to go in there with any kind of energy."
The Nasdaq composite index slipped 64.64 to 1,720.36 after soaring 146.20, or 8.9 percent, yesterday for its third-largest daily percentage gain.
The stock market's broadest measure, the Standard & Poor's 500, fell 23.01 to 1,128.43.
Decliners outnumbered advancing nearly 11 to 4 on the New York Stock Exchange, with 2,141 down, 881 up and 223 unchanged. Volume was 1.4 billion vs. 1.3 billion yesterday. The NYSE composite index fell 9.52 to 583.03, the American Stock Exchange composite index lost 5.15 to 859.56 and the Russell 2000 index fell 10.07 to 434.66.
The Treasury's 10-year note rose 20/32 to 100-27/32; its yield fell 8 basis points to 4.89 percent. The 30-year bond jumped 30/32 to 98-23/32; its yield fell 7 basis points to 5.46 percent.
Few had expected yesterday's big rally to continue through today as investors took some profits, but a fresh crop of earnings warnings reaffirmed the shift in market sentiment for the worse.
A pair of warnings late yesterday from optical networking products Sycamore Networks and measurement equipment maker Agilent Technologies punctured the market's good mood, and another pair today from Tellabs and RadioShack just made matters worse.
All four stocks dropped sharply today as investors once again showed no hesitation to punish companies that miss their targets. Sycamore plunged $1.81 to $7.25, Tellabs plummeted $7 to $33.75, RadioShack sank $10.20 to $28.30 and Agilent fell $2.82 to $27.80.
The market's bad news didn't stop at earnings as California utility Pacific Gas & Electric filed for bankruptcy court protection, having been hurt by soaring wholesale power costs and the state's 1996 deregulation law barring rate increases. Parent PG&E Corp. crumbled $4.18, a drop of nearly 37 percent, to $7.20.
Meanwhile, Credit Suisse First Boston said chip and cellphone maker Motorola still faces a tough business environment. Motorola skidded 23 percent to an eight-year low, down $3.45 at $11.50.
"This is what it's going to look like for a while," said Pradilla. "There's a lot of bad news."
A poor report on the economy also dampened sentiment today. The Labor Department reported that the unemployment rate rose to 4.3 percent in March, the highest level in 20 months, as businesses cut 86,000 jobs. The payroll reduction was the largest since the end of 1991.
Yesterday, "the market showed that it was still able to advance on good news, but today it's also showing that it still vulnerable to bad news," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.