Stocks finished with losses Thursday, falling to their lowest levels of the year, after a negative report on factory activity added to anxiety over downbeat earnings from online auctioneer eBay (EBAY) and a disappointing profit forecast from Qualcomm (QCOM), a wireless phone components company.
The Dow Jones industrial average lost 68.21 points, or 0.65%, to 10,471.76. The broader Standard & Poor's 500 index fell 9.18 points, or 0.77%, to 1,175.45. The Nasdaq composite index declined 27.30 points, or 1.32%, moving to 2,046.29.
Looking ahead, Friday will be another busy day on the earnings front. Among the companies due to report are forest products company Weyerhaeuser (WY), financial services firm KeyCorp (KEY), conglomerates General Electric (GE) and United Technologies (UTX) as well as payroll processing services outfit Automatic Data Processing (ADP).
On Friday, the most important economic news due out is the preliminary reading of the University of Michigan consumer sentiment index for January. The gauge is seen ticking down to 96.5 from 97.1 in the previous month.
Pressuring stocks on Thursday was news from eBay that its fourth-quarter earnings were a penny shy of analysts' average estimates as the company was hurt by higher advertising costs and increased investment. eBay also scaled back its outlook for the first quarter.
In economics news on Thursday, the Philadelphia Fed's factory survey witnessed its sharpest drop in its business conditions index in 18 months, falling to 13.2 in January from a prior 25.4. The prices index, meanwhile, headed the other way, rising to 66.1 from 53.8. Orders came it at 9.8 vs 20.9. "Today's report is consistent with earlier evidence that the economy is cooling off, but not stalling," says Informa Global Markets.
Not all stocks news was negative. Citigroup (C), the world's largest financial services company, posted 12% higher quarterly earnings fueled by growth in its consumer and investment banking businesses.
AT&T (T), the fourth largest U.S. phone company, reported higher fourth-quarter profits thanks to job cuts and a tax benefit from the writedown of its assets.
Merger talk surrounded the retail sector. The Wall Street Journal reported Thursday that Federated Department Stores (FD) is in early discussions to acquire rival May Department Stores (MAY).
In other stocks news, second largest U.S. health insurer UnitedHealth (UNH) posted nearly 46% higher quarterly profit as medical costs got under control.
And Ford (F), the No. 2 U.S. car maker, posted a profit vs. a year-ago loss.
But Delta Air Lines (DAL), posted a staggering $2.2 billion fourth quarter loss, blaming high fuel prices, low yields, and hefty charges.
Motorcycle maker Harley-Davidson (HDI) posted increased quarterly profits on higher sales.
A dip in oil prices kept stocks from bigger losses. Crude prices broke below the $47 mark, with the Nymex March contract at $46.90 per barrel. The decline came despite a host on unfavorable market condition including another cold weather advisory for the U.S. Northeast.
Treasuries strengthened after news that U.S. leading indicators rose 0.2% in December, against expectations of a 0.3% rise and after the downbeat Philly Fed Survey. S&P MarketScope also noted some and some market buzz of a shift out of stocks into Treasuries.
European stock markets closed lower on Thursday. In London, the Financial Times-Stock Exchange 100 index was off 17.50 points, or 0.36%, moving to 4,800.80 following a weaker than expected BCC quarterly fourth quarter economic survey. Amec was lower after company said it will raise 95 million pounds by selling shares in order to fund purchases including Paragon Engineering Services of the U.S.
Germany's DAX index was off 25.12 points, or 0.59%, to 4,220.43 as EuroZone's December Consumer Price Index rose to 0.4% from minus 0.1% in November. Siemens was lower after the company said it is considering how to solve the problems at its telecommunications unit. Deutsche Bank was lower after Goldman Sachs cut its recommendation on the shares to underperform from in-line.
In Paris, the CAC 40 index lost 26.57 points, or 0.69%, to 3,842.44. LVMH was lower after the company reported 2004 earnings rose about 10%, less than the 11% analysts expected. STMicroelectronics and Alcatel were lower after Qualcomm said its profit would miss targets.
Asian markets finished lower on Thursday. Tokyo's Nikkei average fell 120.57 points, or 1.06%, to 11,284.77, its lowest close since December 22, on dampened sentiment following disappointing earnings from U.S. firms. Tech stocks fell, with Advantest sliding 0.92% while Sony edged down 1%. Sony cut its operating profit estimate for this business year by 31%, citing a worsening business climate in the electronics sector. Regional banks such as Shizuoka Bank rose after Goldman Sachs upgraded its view on the regional bank sector. Softbank Investment rose 0.77% after the company reported a 10-fold jump in third quarter profit.
In Hong Kong, the Hang Seng index gave up 135.04 points, or 0.99%, to close at 13,543.59 weighed down by losses in U.S. stocks overnight. Li & Fung fell on concerns about U.S. economy outlook, which is the company's major export market. But China Unicom rose after the telecom operator said it added 1.53 million new subscribers in December. PCCW shares were suspended today.