Star-Bulletin news services
Wall Street pulls back
to wait for earnings
NEW YORK >> Wall Street pulled back yesterday as investors cashed in profits from the market's recent rally while they awaited second-quarter earnings reports. Fears of a potentially unfavorable legal ruling against Altria Group also weighed on shares.
"It's an earnings game from here on out," said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C. "We'll be in for some choppy days until we have a clear direction on what earnings might look like."
The Dow Jones industrial average closed down 66.88, or 0.7 percent, at 9,156.21, following a two-day gain of 152 points.
The broader market finished mixed. The Nasdaq composite index inched up 1.00, or 0.1 percent, to 1,747.46, having advanced 83 points so far this week to reach its highest level in nearly 15 months.
The Standard & Poor's 500 index declined 5.63, or 0.6 percent, to 1,002.21, following a two-day gain of 22 points.
Declining issues outnumbered advancers 5 to 4 on the New York Stock Exchange. Consolidated volume came to 2.03 billion shares, compared with 1.98 billion traded Tuesday.
The Russell 2000 index, which tracks smaller company stocks, rose 3.02, or 0.6 percent, to 476.99. The NYSE composite index fell 25.27 to 5,617.17. The American Stock Exchange composite index rose 2.24 to 974.90.
Dow component Altria Group slid $2.77, or 5.9 percent, to $44 on speculation that an Illinois appellate court might overturn a lower court's decision to lower the amount of bond the parent of Philip Morris needed to appeal a $10.1 billion tobacco verdict.
A government report showing an unexpected drop in wholesale inventories also pressured stocks. The Commerce Department reported inventories fell 0.3 percent in May to a seasonally adjusted level of $289.34 billion. Economists had predicted a 0.1 percent rise.
While stocks have rallied in recent months, investors are now eagerly looking to second-quarter earnings for more solid proof that the economy is rebounding.
Analysts said an absence of significant positive news also prompted many investors to sell, unlike Tuesday's string of merger announcements which helped the Dow overcome early losses to close modestly higher.
"The biggest question is whether technology will continue to lead and earnings will accelerate," Kayes said. "Investors are holding their breath until that occurs. ... Investors are wondering, 'Do we jump into tech stocks now given the big advance, or sell them if earnings don't go through?"'
Tenet Healthcare slipped 5 cents to $12.10 after the hospital chain said it received a civil subpoena from the Securities and Exchange Commission indicating a formal investigation; the SEC had been informally reviewing the company's Medicare charges since November.
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