Stocks finished lower Tuesday as investors took some profits and weighed comments from Federal Reserve Chairman Alan Greenspan. The major averages have been bid up recently in anticipation of strong corporate results, so any disappointments in December-quarter results are likely to be punished, notes Standard & Poor's MarketScope.
The Dow Jones industrial average fell 58 points, or 0.55%, to 10,427.18. The broader Standard & Poor's 500 index lost 6.01 points, or 0.53%, to 1,121.22. The tech-heavy Nasdaq composite index declined 15.34 points, or 0.73%, to 2,096.44, after hitting a new high on Monday.
In remarks before the German central bank Tuesday, Greenspan said he sees no problem for now in funding the massive U.S. trade gap, according to wire-service reports. But he warned rising protectionism could make the global economy less flexible. The Fed chief also said he is not surprised by the flat December jobs figure, reports Informa/MMS, noting that productivity accounts for the slow growth of jobs. He thinks it is "just a matter of time" before employment growth picks up significantly, as soon as productivity growth slows.
On Wall Street, earnings season gets into high gear on Wednesday, with releases coming after the market close from widely-followed companies such as Intel (INTC ), Apple Computer (AAPL ), and Yahoo! (YHOO ).
Economic data coming out Wednesday include the trade balance, producer price index, and the Fed's Beige Book.
In trading on Tuesday, weakness in software and semiconductor stocks weighed on the Nasdaq. Software issues were lower after SAP (SAP ) said it sees lower than expected fourth-quarter revenues.
Accenture (ACN ) shares fell after it reported fiscal first-quarter EPS of 33 cents (includes a 6-cents gain), vs. 27 cents a year ago, on 11% revenue rise before reimbursements. The consulting giant warned of weaker revenue and a charge related to real-estate sales in its second quarter. For its fiscal second quarter, Accenture sees revenue of $3.1 billion to $3.25 billion and EPS of 21 cents to 27 cents.
One stock moving higher Tuesday was Genzyme (GENZ ) on strong fourth-quarter revenue of $479 million, vs. $298 million a year ago. S&P reiterated its buy ranking on the shares, while Schwab SoundView raised estimates.
Storage Technology (STK ) shares rose after the company says it expects fourth-quarter total revenue in excess of $650 million and EPS in excess of 55 cents, which is stronger than expected. UBS raised estimates and price target, and kept its neutral recommendation, on the news.
Other companies that reported results Tuesday were Linear Technology (LLTC ), State Street (STT ), and AmSouth Bancorp (ASO ).
Inamed (IMDC ) says it sees $1.90 to $2.00 2004 EPS (GAAP) on an expected rise in total sales at low-double digit rate from 2003 sales. S&P reiterated a hold ranking and cut estimates and price target.
In other news, Oracle (ORCL ) says it separated its chairmain of the of board and CEO positions. It named CFO Jeff Henley as chairman, replacing Larry Ellison, who will remain CEO. It will name new CFO. S&P kept a hold ranking on the stock.
Abbott Laboratories (ABT ) agreed to acquire TheraSense (THER ) for $27 per share, or about $1.2 billion. Abbott expects the deal to reduce 2004 EPS by 1 cent and add to earnings thereafter.
Treasuries rose in price, as the sharp equity declines after Greenspan's comments in the afternoon sparked reallocation speculation, says Informa/MMS. There were no major economic reports today. Both import and export prices for December rose 0.2%, vs. November's 0.5% gain, both lower than expected.
In Germany, Greenspan declined to comment on the dollar, noting that the Treasury Secretary is the spokesman on that issue, notes Informa/MMS. He also says that markets will address the U.S. current account deficit if no measures are taken (the only "measures" available are tighter monetary and fiscal policy). Greenspan also warns that caution is needed in directing markets, and that unexpected events can occur -- a possible reference to efforts to direct currency rates, according to Informa/MMS.
Oil futures jumped above $35 per barrel before settling around $34.25, as another cold front heads toward the Northeast.
European stock markets finished mixed. London's Financial Times-Stock Exchange 100 index fell 9.5 points, or 0.21%, to 4,440.1. Traders paid little attention to a report that Britain's manufacturing index for November suffered the worst loss in a year, which surprised many economists.
In Paris, the CAC 40 added 16.08 points, or 0.45%, to 3,576.18, even though French industrial production fell in November, and consumer prices rose only 0.1% in December. Germany's DAX index was up 0.31 point, or 0.01%, to 3,996.22 as the DIW Institute said the German economy grew 0.5% in the fourth quarter.
Asian markets finished mixed Tuesday. In Japan, the Nikkei 225 index fell 115.37 points, or 1.05%, to 10,849.68. In Hong Kong, the Hang Seng index rose 44.43 points, or 0.33%, to 13,396.65.