Star-Bulletin news services
Terrorism, profit worries
hold back shaky investors
NEW YORK >> Uncertain investors sent stocks lower yesterday, as the market's uneasiness over terrorism and future earnings overshadowed an unexpected drop in wholesale prices and another series of upbeat profit reports.
While second-quarter earnings in the financial and technology sectors came in above estimates, stocks moved in and out of negative territory for much of the day, partly because of options expirations today. In addition, investors were increasingly concerned about third- and fourth-quarter profit outlooks, as well as a number of economic and political issues, analysts said.
"It's extremely frustrating. Earnings are good, fundamentals are good, but all these other worries -- terrorism, oil prices, interest rates, the election -- are keeping people on the sidelines," said Richard A. Dickson, senior market strategist at Lowry's Research Reports. "I think the great earnings we have here were baked into the market last year. Now we're waiting for some other reason to go up or down."
The Dow Jones industrial average fell 45.64, or 0.4 percent, to 10,163.16.
Broader stock indicators were modestly lower. The Standard & Poor's 500 index was down 4.78, or 0.4 percent, at 1,106.69, and the Nasdaq composite index slipped 2.17, or 0.1 percent, to 1,912.71.
The price of the benchmark 10-year Treasury note was unchanged yesterday although the yield fell to 4.48 percent from 4.49 percent late Wednesday. The 2-year note fell 1/32 point to yield 2.61 percent.
The producer price index dropped 0.3 percent in June, according to the Labor Department -- a sign that inflation might not be as serious an issue as some had feared. Economists had expected a slight rise. And the Commerce Department said inventories rose 0.4 percent in May, while sales climbed 0.7 percent, signs that businesses are increasing their investments and that consumers are rewarding their efforts.
Jobs, however, continue to be an area of concern. First-time jobless claims rose by 40,000 for the week to 349,000. The Labor Department blamed seasonal adjustments at the nation's automakers for the increase.
With good and bad news in equal measure, most investors chose to wait out the session in advance of IBM Corp.'s earnings, which came out after the close. IBM, which beat estimates by 4 cents per share, rose 73 cents to $84.75 in after-hours trading.
"I think some people are looking to IBM, but there are plenty who are just waiting, period," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. "Nobody's worried that the market's about to cave, but there's no catalyst for the upside either."
Despite a massive one-time charge to settle lawsuits over the WorldCom scandal, Citigroup managed to beat Wall Street estimates for the second quarter by 5 cents per share. Citigroup was down 89 cents at $44.21.
STOCK QUOTES/CHARTS/DATA
