NEW YORK >> A profit warning from McDonald's discouraged investors today, reminding them of the weak economy and prompting them to unload stocks. McDonald’s profit warning
prompts market sell-offBy Amy Baldwin
Associated PressAlthough there was some good economic news, investors still opted to take profits from a substantial advance in the previous session and from a two-month fall rally. Analysts said some selling was to be expected, given the market's recent gains and the fact that the earnings and economic recoveries investors are hoping for in 2003 aren't yet assured.
Declining issues outnumbered advancers about 8 to 5 on the New York Stock Exchange. Trading volume was light. The Dow Jones industrial average closed down 92.01, or 1.1 percent, at 8,535.39. The blue chips jumped 193.69 yesterday.
The broader market also retreated. The Nasdaq composite index fell 8.28, or 0.6 percent, to 1,392.05. The Standard & Poor's 500 index declined 7.41, or 0.8 percent, to 902.99. The Russell 2000 index fell 3.65, or 0.9 percent, to 391.25.
The price of the Treasury's 10-year note was up 3/8 point, while its yield fell to 4.11 percent from 4.15 percent yesterday. Two-year Treasury notes were up 1/8 point and yielded 1.84 percent, down from 1.91 percent yesterday.
"We had a big run-up yesterday and the basis for that is not really clear," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston. "McDonald's could have a negative impact. And things in the Middle East continue to sound worrisome, and that has some impact."
Today's batch of economic news was positive. The Federal Reserve reported that industrial production rose 0.1 percent in November, bouncing off a 0.6 percent drop in October and matching Wall Street's expectations.
In another report, the Labor Department said consumer prices edged up 0.1 percent in November, the smallest gain since July and better than analysts had anticipated.
And in a separate report, the Commerce Department said that construction of new homes rose 2.4 percent in November due to the lowest mortgage rates since the 1960s.
But the economic reports failed to overshadow negative news, including a fourth-quarter profit warning from McDonald's, which sent the stock down $1.38 at $16.
Other losers included Best Buy, down $1.40 at $24 after beating third-quarter earnings expectations by penny a share but also projecting a flat fourth quarter.
Chip maker Micron Technology declined 21 cents to $13.28 ahead of earnings due to be released later in the day. Software maker Oracle fell 28 cents to $11.02 ahead of it earnings due to be reported tomorrow.
Despite today's slippage, market observers said the mood on Wall Street remains upbeat and the market's bias is to move up, not down.
Overseas, Japan's Nikkei stock average finished up 0.7 percent. In Europe, France's CAC-40 declined 1.1 percent, Britain's FTSE 100 fell 1.9 percent and Germany's DAX index lost 2 percent.
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