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Weak 3M outlook
adds to investor worries
NEW YORK >> A negative profit outlook from 3M Co. disappointed Wall Street yesterday, leaving stocks mixed as investors grew worried that second-half profits will fall short of expectations. Technology shares eked out minimal gains in advance of Microsoft Corp.'s earnings later in the week.
While second-quarter earnings, including 3M's, have generally beaten estimates, investors are now focusing on the rest of 2004, worried that profit growth will slow even as interest rates rise and consumer spending drops off.
"We're looking at these outlooks hoping for some kind of sign on what the economy's going to do in the third and fourth quarter, and nobody wants to jump until then," said Bill Groenveld, head trader for vFinance Investments. "Right now, there's no volume, no trends to follow. People like to follow trends, but nobody's sticking their neck out to make one."
Many investors were waiting for Federal Reserve Chairman Alan Greenspan's testimony before a Senate committee today and Microsoft's earnings, due late Thursday.
The Dow Jones industrial average fell 45.72, or 0.4 percent, to 10,094.06. The Dow was down more than 74 points earlier in the session.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index slipped 0.49, or 0.04 percent, to 1,100.90, and the tech-heavy Nasdaq composite index, which was heavily sold off over the past two weeks, was up 0.68, or 0.04 percent, at 1,883.83.
While 3M beat its second-quarter profit estimates by a penny, the manufacturing giant said its third-quarter profits would be slightly lower than expected, taking many investors by surprise. 3M tumbled $4.79 to $83.05.
The negative outlooks, which have come from a variety of sectors, from the largest to smallest companies, have put investors on edge, analysts said, leaving little chance for stocks to break higher in the short term.
"People were all set for positive earnings, and like today, we had some negative surprises," said Brian Bruce, director of global investments at PanAgora Asset Management Inc. "For us to break out of this slump, it's going to take some stronger-than-expected earnings, maybe we have to get past the conventions with no terrorism. It'll take a lot."
Kraft Foods Inc. was up 83 cents at $31.13 after its earnings came in as expected, though the company saw a dip in overall profits due to higher production costs. Parent company Altria Group Inc., another Dow component, rose 17 cents to $48.83.
Occidental Petroleum Corp. saw its earnings surge 55 percent in the quarter due to higher energy prices, even as it announced the retirement of its president. Occidental fell 47 cents to $50.00.
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