Stocks finished lower Wednesday -- the second consecutive losing session, and the fourth down session in five. Negative earnings news and concerns about war with Iraq moved to the fore, as investors brushed aside good economic data. Major indexes gave up much of the gains from Monday's rally.
"You never like to see markets drizzle down at the end of the year," says Michael Farr, president and chief investment officer at Washington, D.C.-based investment firm Farr, Miller, and Washington. Still, Farr says he expected the week's positive economic data to nudge indexes higher by year's end.
The Dow Jones Industrial finished Wednesday down 88.04 points, or 1.03%, to 8,447.35. The broader Standard & Poor's 500-stock index fell 11.87 points, or 1.31%, to 891.12. The tech-laden Nasdaq composite slipped 30.55 points, or 2.19%, to 1,361.50.
After Tuesday's closing bell, computer memory maker Micron Technology (MU ) posted a loss of 52 cents a share for the first quarter, well below Wall Street's estimates. The chip-maker's wide earnings miss set a downbeat tone for trading Wednesday, especially for technology shares. Micron shares fell 23% Wednesday afternoon, dragging down other semiconductor stocks such as Intel (INTC ) and Advanced Micro Devices (AMD ).
Adding to Wednesday's woes, insurance outfit Conseco (CSCE ) filed for Chapter 11 protection in a Chicago bankruptcy court, marking the third-largest bankruptcy in U.S. history.
After Wednesday's market close, software maker Oracle (ORCL ) reported second quarter profits of 10 cents a share, beating previous forecasts of eight to nine cents a share.
In another post-market earnings report, handheld computer maker Palm (PALM ) said it booked profits of 12 cents a share for the second quarter.
Before Wednesday's opening bell, cereal maker General Mills (GIS ) announced second quarter earnings of 77 cents per share, ahead of analysts' expectations of 74 cents a share. Shares traded ahead 2.43% Wednesday.
Shipping company FedEx (FDX ) announced on-target second quarter earnings of 81 cents a share, the same as last year's second quarter.
Also reporting earnings, investment bank Bear Stearns (BSC ) announced profits of $1.36 per share, beating consensus estimates. Shares moved slightly into the green by late Wednesday afternoon.
Another bank, Bank of New York (BK ), saw shares fall 15.51% on news that it would take losses on exposure to UAL Corp. (UAL ), parent company of bankrupt carrier United Airlines.
Other brokerages, including Goldman Sachs (GS ), Lehman Brothers Holdings (LEH ), and Morgan Stanley (MWD ) were expected to announce earnings Thursday.
Among the many others expected to announce quarterly earnings Thursday were ConAgra Foods (CAG ), Jabil Circuit (JBL ), Nike (NKE ), Rite Aid (RAD ), and Blackberry-maker Research in Motion (RIMM ).
Movie rental outlets had a rough session Wednesday. Blockbuster (BBI ) cut its fourth quarter sales estimates. Shares in the No. 1 movie rental chain plummeted 30% in afternoon trading. No. 3 chain Movie Gallery (MOVI ) said quarterly sales will hit the low end of expectations, driving its shares down 16.80% Wednesday.
GE Medical Systems, a division of General Electric (GE ), said it would buy Finnish medical equipment maker Instrumentarium (INMRY ). Shares in the Finnish company shot up 41.7% on the news.
In economic news, the October U.S. trade deficit shrank to $35.1 billion in October from $37.1 billion (revised downward) in September. While the trade gap was smaller than economists predicted, a 10-day West Coast ports strike--which reduced imports--likely affected the figure. No other significant economic data were released Wednesday.
On Thursday, November leading economic indicators were expected to be announced. Economists expect a 0.6% rise. Leading economic indicators, which are looked to as a sign of future economic activity, rose 0.6% in October.
On the commodities front, oil and gold rose as geopolitical concerns grew. Gold prices hovered near five-year highs, while crude oil prices climbed above $30 per barrel Wednesday morning.
Prices of U.S. Treasuries posted solid gains Wednesday. Investors fled stocks as corporate earnings disappointed and fears of war grew. Investors ignored the positive trade balance numbers.
The yield for the safe-haven two-year note fell eight basis points to 1.78%, and the benchmark 10-year issue's yield dipped seven basis points to 4.06%.
European markets closed lower. London's FTSE 100 index fell 73.50 points, or 1.88%, to 3,835.20. In Germany, Frankfurt's DAX Index fell 117.28 points, or 3.74% to 3,022.69. The Paris CAC 40 slid 61.22 points, or 1.95%, to 3,077.39.
In Asia, stocks finished lower. In Japan, high-tech stocks led the way down, as the Nikkei 225 Index lost 166.72 points, or 1.96%, to 8,344.01. In Hong Kong, the Hang Seng index slipped 167.09 points, or 1.72%, to 9,548.65.