NEW YORK >> Wall Street made an expected retreat yesterday on discouraging earnings from Intel and profit taking from a four-day rally that had boosted the Dow Jones industrials nearly 1,000 points. Intel drags market lower
By Amy Baldwin
Associated PressThe Dow fell nearly 220 points, its losses widening after President Bush signed a congressional resolution that would allow him to use force if necessary against Iraq.
While the possibility of war and Intel's results weighed on Wall Street, stocks had been expected to pull back after their huge rally. But overall third-quarter earnings are expected to surpass forecasts, which analysts said puts the market in position to continue its advance.
The Dow closed down 219.65, or 2.7 percent, to 8,036.03. Yesterday, the Dow soared 378 points and closed above 8,000 for the first time in a month; over the previous four sessions, it rose 969.
The broader market was also lower. The Nasdaq composite index sank 50.05, or 3.9 percent, to 1,232.39. The Standard & Poor's 500 index fell 21.29, or 2.4 percent, to 859.94.
Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume was fairly heavy.
The Russell 2000 index, the barometer of smaller company stocks, fell 9.67, or 2.7 percent, to 350.85. The NYSE composite index fell 9.88 to 462.31. The American Stock Exchange composite index dropped 10.23 to 800.33.
The price of the Treasury's 10-year note was down 1/16 point, or $0.625 per $1,000 in face value, around midday Wednesday, while its yield rose to 4.01 percent from 3.99 percent late Tuesday. Prices and yields move in opposite directions.
The 30-year bonds were down 7/32 point and yielded 4.99 percent, up from 4.97 percent late Tuesday, according to Moneyline Telerate.
Two-year Treasury notes were up 1/32 point and yielded 1.99 percent.
Analysts were encouraged by the big four-day rally, especially after weeks of pretty dreadful sell-offs as companies reduced their profit outlooks.
"The market has shown over the past four days that it can rally again. That's good," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.
But analysts also cautioned against investors counting on big gains to swiftly turn the market around.
"You'd be concerned if it went up too fast," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.
After all, stocks have suffered nearly three years of declines and can't be expected to snap back in a matter of weeks.
"This market is going to take some time to prove the bottom and prove it can be stable for a while," Belski said.
Belski also noted that the market is susceptible to so-called event risks, namely the possibility of war with Iraq. After Bush signed the congressional resolution, stocks declined further and the Dow, already down about 140 points, fell to a decline of more than 200 points.
Intel dropped $2.98 to $13.54, having announced late yesterday that earnings missed analysts' expectations by 2 cents a share. Rival chip maker IBM fell $3.58 to $64.90 and Advanced Micro Devices stumbled 71 cents to $3.63 ahead of their earnings results due later in the day.
IBM announced after the market closed that its third-quarter earnings from continuing operations and before items rose as the computer services, hardware and software company offset weak demand for technology by cutting costs.
IBM said its profit excluding most of its hard disk drive operations, which it plans to sell this year, rose to $1.7 billion, or 99 cents per share, compared with $1.7 billion, or 97 cents per share, a year ago.
On that basis, the Armonk, N.Y.-based company was expected to report earnings of 96 cents per share within a range of 90 cents to $1.02 per share, according to Thomson First Call.