Dow stocks finished lower for a seventh straight session Tuesday as losses accelerated in the final hour of trading. Federal Reserve Chairman Alan Greenspan's testimony to Congress could not offset ongoing worries over corporate wrongdoing and earnings weakness.
The Dow Jones industrial average, which had rebounded from a 200-point drop earlier during the Fed chief's speech, finished down 166.08 points, or 1.92%, to 8,473.11. Meanwhile, the broader Standard & Poor's 500-stock index lost 17.94 points, or 1.95%, to 899.99. The tech-heavy Nasdaq composite index fared somewhat better, giving up 7.36 points, or 0.53%, to 1,375.26.
On the earnings front, after Tuesday's market close Intel (INTC ) reported second-quarter net income of $446 million, which was in line with its own lowered forecasts, citing slow sales in Europe. The chipmaker said third-quarter revenue would be flat to slightly higher than the second quarter. It also plans to reduce its work force by 4,000 in the second half of the year. Intel shares were off 5% in aftermarket trading.
Apple Computer (APPL ) reported lower earnings and revenue for the recent quarter, due to market weakness in the personal computer business. Apple shares were down 10% in aftermarket trading.
During Wednesday's session, investors will digest the latest earnings updates from Coca-Cola (KO ) and Boeing (BA ). After Wednesday's market close, investors will see profit reports from IBM (IBM ) and Seibel Systems (SEBL ).
Greenspan will finish the second half of his testimony to the Senate Banking Committee on Wednesday. In the first leg of his two-day semi-annual monetary policy testimony Tuesday, the Fed chief said the economic recovery is gaining strength but that corporate malfeasance is posing a threat. Greenspan said the Fed looks for growth in the 3.5% to 4% area next year, with inflation expected to remain tame.
Still, investors are battling a myriad of worries -- weakness in the dollar, second-quarter earnings disappointments and the latest headlines of company and executive misdeeds.
Among Tuesday's earnings updates, Continental Airlines (CAL ) posted a quarterly loss of $139 million. Its deficit marks the first of many large losses expected from the nation's major airlines in the coming days and weeks, as the industry struggles through a downturn.
Several Dow index components were in the news. Johnson & Johnson (JNJ ) said quarterly profits rose, on strong sales of prescription drugs like anemia treatment Procrit and arthritis drug Remicade. The stock gained ground on the update.
Construction equipment maker Caterpillar (CAT ) said that quarterly earnings fell on slow sales of machinery and engines. Its shares were sharply lower on the news.
General Motors's (GM ) reported better-than-expected second-quarter profit, but investors sold off their GM shares as the carmaker will fall short of its goal of cutting European operation losses by half this year.
J.P. Morgan (JPM ) shares slumped after a Wall Street Journal article said that eleven insurance companies have said that the bank conspired to make Enron look healthier than it was. The company also denied rumors in European markets that it was having liquidity problems, according to wire service reports.
Good news from companies like Nextel Communications (NXTL ) helped the Nasdaq's relative outperformance, as the wireless phone concern's stock jumped on a second quarter earnings report that showed a 25% revenue increase.
Treasuries finished lower amid a lack of any signs from Greenspan that the Fed will ease rates. This caused shorter-dated notes to underperform, says MMS.
Investors Wednesday will mull the latest housing data. MMS expects housing starts to fall 3.1% to a 1.68 million unit pace in June. The decline would merely represent a pullback after the surge last month left the pace of activity just off a record pace. No significant impact is expected in the market from this data.
In other economic news Tuesday, U.S. manufacturers saw a rise in production for the sixth straight month in June, the Federal Reserve said. Factories, mines and utilities jumped 0.8% last month, its biggest gain since October 1999, after a 0.4% rise in May. Capacity used by the industrial sector also rose to 76.1%, from 75.6% in May. The results exceeded expectations.
European stock markets finished mostly higher as Greenspan appeared to calm worries over the U.S. economic recovery. In London, the Financial Times-Stock Exchange 100 index finished up 27.40 points, or 0.69%, to 4,021.90. France's CAC 40 fell 5.93 points, or 0.18%, to 3,317.81. Germany's DAX index added 65.24 points, or 1.67%, to 3,977.75.
Asian markets ended lower. In Japan, the Nikkei 225 index lost 124.73 points or 1.20%, to 10,250.42. The Nikkei's losses deepened due to uncertainty over global equities and currencies given the fragility of U.S. markets. In Hong Kong, the benchmark Hang Seng index fell 160.17 points, or 1.51%, to close at 10,421.49.