Stocks relinquished earlier gains to finish lower Tuesday, as investors couldn't ignore lower earnings reports from several high-tech bellwethers.
Among the techs reporting earnings, Compaq Computer Corp. (CPQ), which posted quarterly operating profit that fell as it battled soft sales and price cuts by rivals such as Dell Computer Corp. (DELL), which surpassed Compaq as the leading PC maker during the quarter. Shares of Compaq ended lower.
Telecom equipment giant Lucent Technologies Inc. (LU) said its second-quarter results plunged as the slowdown in customer spending combined with its restructuring to drag down results. The company, based in Murray Hill, N.J., reported an operating loss of $3.7 billion, or $1.08 per diluted share, excluding the Agere unit that was recently partly spun off, compared with net income of $755 million, or 23 cents a share, in the same period last year. Lucent stock finished up.
Other stocks in the news Tuesday include JDS Uniphase Corp. (JDSU). The supplier of fiber-optic components posted a $1.3 billion third-quarter net loss, and said it would cut some 5,000 jobs, or 20% of its work force due to a slowdown in equipment spending by telecom companies. Shares of JDS Uniphase ended lower.
Earlier in the session, investors ignored bad earnings news. "Historically, we have seen that the stock market can perform very well even in the midst of declining corporate earnings. This is because, during a slowing economy, companies are already feeling the effect of this slowdown and the Federal Reserve is in an accommodating mode by easing interest rates," Mark D. Garfinkel, manager of the STI-Classic Funds Small Capital Growth Stock Fund, told Standard & Poor's research unit. But dismal earnings from the technology front gained steam.
Among the few bright spots on Wall Street Tuesday was an energy IPO. Shares of Aquila Inc. surged nearly 25% when the wholesale energy producer debuted on Wall Street on Tuesday, after a twice-boosted new stock offering that raised $420 million amid rising electricity and natural gas prices.
The Dow Jones Industrial Average ended down 76.59 points, or 0.73%, to 10,455.64. The Nasdaq Composite index was down 42.72 points, or 2.07%, to 2,016.60. Meanwhile, the broader S&P 500 shed 14.90 points, or 1.22%, to 1,209.46.
U.S. Treasuries finished lower. In economic news, the Conference Board's April Consumer Confidence index slid sharply to 109.2 in April from a downwardly-revised March reading of 116.9, its sixth tumble in seven months. Consensus forecasts were for a fall to 112.0. The April data does not include the Federal Reserve's surprise inter-meeting interest rate cut last week.
Data on tap for Wednesday: March reports on durable good orders and new and existing home sales.
European markets closed mixed. In London, the Financial Times-Stock Exchange 100 index lost 31 points, or 0.53%, to 5,840.30. In Germany, the DAX Index gained 73.09 points, or 1.21%, to 6,124.57. In France, the CAC 40 shed 27.58 points, or 0.51%, to 5,424.43.
In Asia, the markets ended mixed. The Nikkei gained 27.58 points, or 0.20%, to 13,743.18. In Hong Kong, the Hang Seng ended down 36.89 points, or 0.28%, to 13,274.61. By Heesun Wee in New York