Stocks tumbled for a second straight day Thursday as investors fretted about a number of things: prospects for slowing consumer spending, uninspiring guidance from Apple Computer (AAPL ), and concern over economic growth and corporate earnings. Major indexes sank to five-month lows, accompanied by heavy trading volume.
On Thursday, the Dow Jones industrial average fell 125.18 points, or 1.2%, to 10,278.75. The broader Standard & Poor's 500 index was down 11.74 points, or 1.0%, to 1,162.05. The Nasdaq composite index dropped 27.66 points, or 1.4% to 1,946.71.
Investors were money moving out of cyclicals and transports into defensive issues including pharmaceuticals, food, and beverages, says Standard & Poor's MarketScope. The monthly expiration of futures and options on Friday may have also been driving some volatility, says S&P.
In economic news Thursday, U.S. business inventories rose 0.5% in February, below median estimates, while sales dropped by 0.4%.
Meanwhile, weekly initial jobless claims fell by 10,000 to 330,000, in line with expectations.
Crude oil prices rose Thursday after falling over a dollar during the previous session. The price of crude finished higher by 91 cents to $51.13 a barrel.
In earnings news, PepsiCo (PEP ) reported first-quarter earnings of 53 cents per share, vs. 46 cents a year ago. The company said that the 13% rise in earnings was led by strong profit growth in its international operations. The company raised its annual guidance by a penny.
The New York Times (NYT ) posted earnings of 76 cents per share for the first quarter, vs. 38 cents per share last year, on a slight rise in overall revenue.
UnitedHealth Group (UNH ) saw $1.16 in first-quarter earnings, vs. 88 cents last year. The company saw a 34% rise in revenues, beating estimates. It also raised its 2005 estimate.
But investors appeared to focus on reports from two marquee tech names, released after the close of trading Wednesday. Apple reported a 70% increase in gross revenue, and earnings of 34 cents a share, vs 6 cents a share last year. This beat analyst estimates. Analysts took issue with the company's third quarter guidance, however, which implied that sales will be flat compared with the second quarter.
And Advanced Micro Devices' (AMD ) results fell short of Wall Street expectations, as the chipmaker posted a first-quarter loss of 4 cents per share, though its revenues were higher. The chipmaker also set a spinoff of its flash memory unit.
On Friday, Citigroup (C ) and General Electric (GE ) will report earnings.
Also on Friday, the monthly index of industrial production is due out.
The as-expected business inventories and weaker-than-expected jobless claims had little effect on Treasury yields Thursday. The yield on the benchmark 10-year note finished slightly lower at 4.34%.
European stock markets finished lower Thursday. London's Financial Times-Stock Exchange 100 index was down 15.40 points, or 0.31%, to 4,945.40.
Germany's DAX index fell 3.64 points, or 0.08%, to 4,402.05.
In Paris, the CAC 40 index lost 5.74 points, or 0.14%, to 4,111.11.
Asian markets finished lower on Thursday. In Japan, the Nikkei 225 index fell 74.35 points, or 0.64%, to 11,563.17.
Hong Kong's Hang Seng lost 27.22 points, or 0.20%, moving to 13,772.40.