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Nokia’s weak outlook
sends stocks tumbling
NEW YORK -- A disappointing revenue outlook from Nokia Corp. set off profit-taking on Wall Street yesterday as investors were reminded that a strong economic rebound isn't such a sure thing.
"The market took its cue from Nokia," said John Caldwell, chief equity strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.
"As the market is anticipating with its huge run-up better earnings growth in the third and fourth quarter, we'll need confirmation from revenues as well. That's adding a layer of concern in the market today."
The Dow Jones industrial average closed down 79.09, or 0.8 percent, at 9,507.20, having gained nearly 83 points in the previous session.
The broader market also finished lower. The Nasdaq composite index fell 15.19, or 0.8 percent, to 1,873.43. The Standard & Poor's 500 index declined 8.47, or 0.8 percent, to 1,023.17.
Declining issues outnumbered advancers about 9 to 5 on the New York Stock Exchange. Consolidated volume came to 1.85 billion shares, compared with 1.72 billion traded Monday.
The Russell 2000 index fell 3.56, or 0.7 percent, to 513.57. The NYSE composite index lost 39.42, or 0.7 percent, to 5,766.18. The American Stock Exchange composite index dropped 3.94, or 0.4 percent, to 992.81.
The 2-year Treasury note rose 18 to 1001932, with its yield falling to 1.68 percent. The 10-year note gained 1532 to 99 2/32, with its yield declining to 4.37 percent.
Nokia fell $1.09 to $15.98 after the cell-phone maker said it expects third-quarter revenue to be flat or slightly lower; that disappointed analysts hoping for a more robust outlook.
Larry Wachtel, market analyst at Wachovia Securities, said it was a good sign that yesterday's declines were somewhat modest. Since the rally began in mid-March, the Dow is up 26 percent, the Nasdaq has climbed 47 percent and the S&P is up 28 percent.
"This is a mild-mannered pullback in a market boiling for six months," he said. "After six months in a bull market, normally you retract one-third to one-half of the advance. You haven't come close here. People just don't want to let go."
Retailers also took a hit after Goldman Sachs & Co. lowered the stock ratings of The Home Depot Inc., Federated Department Stores Inc. and The May Department Stores Co., citing weak outlooks. Home Depot dropped $1.60 to $32.15, while Federated lost $1.38 to $42.44 and May fell $1.14 to $25.20.
But McDonald's Corp. rose 24 cents to $23.59 after the fast-food chain said August same-store sales rose 3.8 percent; in the United States, sales rose 8.8 percent, representing the fifth consecutive month of gains since the company announced a turnaround plan..
Research in Motion Ltd. surged $6.31, or 22.3 percent, to $34.55, after the maker of BlackBerry pagers raised its fiscal second-quarter outlook.
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