Negative tech reports
hamper stock market

NEW YORK » Nervous investors overlooked strong earnings from Citigroup Inc. and a possible merger of two department store giants, and pushed stocks substantially lower yesterday on disappointing earnings from the technology sector.

Investors were troubled as perennial market favorite eBay Inc. missed its earnings target for the fourth quarter and said its outlook for the current quarter was lower than expected. Three brokerage firms lowered their ratings on the online auctioneer. Cell phone maker Qualcomm Inc. likewise issued a disappointing profit forecast.

The pressure from tech shares siphoned momentum from Citigroup's strong earnings, and investors also shrugged off reports of merger talks between Federated Department Stores Inc. and May Department Stores Co.

In the face of other uncertainties -- the upcoming Iraqi elections, OPEC's meeting on Jan. 30 and ongoing concern about inflation -- the market will likely continue to give ground should earnings disappoint, analysts said.

The Dow Jones industrial average fell 68.50, or 0.65 percent, to 10,471.47.

Broader stock indicators also lost ground. The Standard & Poor's 500 index was down 9.22, or 0.78 percent, at 1,175.41, and the Nasdaq composite index dropped 27.71, or 1.34 percent, to 2,045.88.

That correction has nearly wiped out all the Nasdaq's gains from the fourth quarter rally, while severely denting the advances made by the Dow and S&P 500. The Nasdaq's close was its worst showing since Nov. 10, while the Dow had its lowest close since Dec. 7 and the S&P saw its worst close since Nov. 30.

The talks between Federated and May, reported yesterday by the Wall Street Journal, signals another major consolidation in the retail sector, which is struggling to overcome the dominance of Wal-Mart Stores Inc. The proposed merger would combine Federated's Macy's and Bloomingdale's stores with May's Lord & Taylor, Filene's and Marshall Field's.

Federated slid $1.77 to $55.31 on the news, while May, which recently jettisoned Chief Executive Gene Kahn, gained $2.88, or 9.18 percent, to $34.25.

EBay tumbled $19.72, or 19.14 percent, to $83.33 after missing Wall Street profit forecasts by a penny per share. The company drew immediate criticism from analysts after posting a 2005 outlook that, while still very solid, was less than expected.

Qualcomm posted a 46 percent rise in first quarter earnings, thanks to upgraded wireless networks, and surpassed Wall Street profit forecasts by a penny per share.