Star-Bulletin news services
Earnings, jobless claims
send Wall Street lower
NEW YORK >> An unexpected rise in jobless claims unnerved Wall Street yesterday, sending stocks sharply lower on worries the market's recent rally might have come too far, too fast. Yahoo! earnings which met, but didn't beat, estimates also disappointed investors.
"Yahoo didn't deliver significant upside and it's a huge momentum name, so you have some momentum taken out of the market," said Keith Keenan, vice president of institutional trading at Wall Street Access, a New York-based brokerage firm. "The bulls anticipated much higher numbers."
The Dow closed down 120.17, or 1.3 percent, at 9,036.04, having lost 66 points Wednesday. It was the sharpest point drop since June 23, when the blue chips closed 127.80 points lower.
The broader market also declined. The Nasdaq composite index dropped 31.60, or 1.8 percent, to 1,715.86. The Standard & Poor's 500 index fell 13.51, or 1.4 percent, to 988.70.
Declining issues outnumbered advancers 5 to 2 on the New York Stock Exchange. Consolidated volume was moderate at 1.84 billion shares, compared with 2.04 billion traded Wednesday.
The Russell 2000 index, a barometer of smaller company stocks, fell 7.96, or 1.7 percent, to 469.03. The NYSE composite index dropped 72.38 to 5,544.79. The American Stock Exchange composite index slipped 7.44 to 967.46.
Yahoo slid $2.73, or 7.7 percent, to $32.56 after the Internet company reported quarterly profit doubled. The result was in line with forecasts, but First Albany lowered the company's stock rating to "neutral" from "buy," citing in part possible overvaluation.
The Labor Department reported yesterday that new jobless claims rose last week by a seasonally adjusted 5,000 to 439,000, the highest level since the week ending May 31. Economists were expecting a decline in claims.
Comments from Federal Reserve Chairman Alan Greenspan that high natural gas prices might not be alleviated anytime soon also appeared to pressure shares. Greenspan said the high prices would likely cause some industries to lose business to foreign competitors, but added that the overall economic impact was unclear.
Stocks have surged in recent months as investors grow increasingly upbeat about a solid economic recovery by year's end. But analysts say investors now want to see more concrete evidence of improvement, particularly in the tech sector, which has seen particularly strong gains.
Still, analysts described yesterday's declines as more of a natural pullback. On Tuesday, the Nasdaq composite reached a near 15-month high, while the Dow and S&P traded at levels not seen in a year.
Abbott Laboratories fell 13 cents to $43.55 after the company posted operating profits that were in line with previous estimates.
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