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Earnings letdown
deflates Wall Street
NEW YORK >> Investors sent stocks tumbling yesterday, showing their dissatisfaction with third-quarter earnings after several pharmaceutical companies failed to meet Wall Street's expectations. The Dow Jones industrials dropped nearly 150 points, their biggest decline in nearly a month.
Disheartening results and less than dazzling forecasts fueled a sell-off in several sectors, notably health care and technology. Analysts said investors were feeling let down after a month of bidding stocks higher in anticipation of a robust quarter.
The Dow lost 149.40, or 1.5 percent, to close at 9,598.24, its biggest one-day point decline since it fell 150.53 on Sept. 24.
The Nasdaq composite index dropped 42.83, or 2.21 percent, to close at 1,898.07, its biggest drop since it fell 58.02, also on Sept. 24. The Standard & Poor's 500 index shed 15.67, or 1.5 percent, to close at 1,030.36. The index also had its largest drop since Sept. 24, when it fell 19.65.
Decliners beat advancers nearly 3 to 1 on the New York Stock Exchange. Consolidated volume was heavy, with 2.17 billion shares traded, compared with 1.92 billion on Tuesday.
The Russell 2000 index declined 12.38, or 2.4 percent, to close at 513.15. The NYSE composite index lost 79.86, or 1.3 percent, to 5,858.13. The American Stock Exchange composite index slipped .99, or 0.1 percent, to 1,018.29.
The Treasury's two-year note gained 532 to 99 2432, with its yield falling nine basis points to 1.75 percent. The 10-year note rose 2432 to 100 1/32, with its yield dropping 10 basis points to 4.25 percent.
Analysts blamed some of the Dow's decline on a disappointing report from Merck & Co. Merck, which missed analysts' forecasts by 3 cents a share and announced plans to cut about 4,400 jobs, lost $3.19 or 6.5 percent, to close at $45.72. Other pharmaceutical companies reporting earnings yesterday also fell.
Schering-Plough Corp., stung by slumping sales and the loss of patent protection for its one-time blockbuster allergy drug Claritin, missed expectations and lost 88 cents, or 5.5 percent, to $15.12. Wyeth also missed Wall Street's forecast, in part due to charges related to diet drug litigation. It lost $2.50, or 5.5 percent, ending the day at $43.30.
Amgen Inc., which reversed a third-quarter loss on strong sales of an anemia treatment for cancer patients, beat analyst expectations by 2 cents a share in results released Tuesday, but failed to impress the market. Morgan Stanley cut its rating to "equal-weight" from "overweight," and the biotech firm dropped $3.35, or 5.3 percent, to close at $60.30.
Investors also punished Amazon.com Inc., which beat analysts' expectations by a penny a share but narrowed its earnings forecast for next year. The online retailer, which was downgraded by several brokerages, fell $5.32, or 8.96 percent, to close at $54.03.
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