Earnings, Fed Worries Weigh on Stocks

Stocks closed lower to end a listless trading session. Next up in the earnings parade: drug giants Johnson & Johnson and Merck

After flirting with positive territory earlier, stocks closed lower to end a listless trading session. Wall Street mulled more earnings reports and economic data that underscored a slowing economy -- and suggested the Fed may cut interest rates when it convenes next week.

James Gribbell, manager of Babson Growth Fund, told Standard & Poor's research unit that investors expect interest rates to fall over the next 3-6 months and are buying stocks they expect to benefit from that.

"I think a lot of people are looking for interest rate plays right now," said Gribbell. "Clearly the finance names -- the brokers -- have been strong."

Gribbell also said the Nasdaq seemed to shrug off the earnings warning by personal computer maker Dell Computer Corp. (DELL ). "The Dell news really was a non-event." Many personal computer makers have issued poor forecasts recently, said Gribbell, so "if anyone was surprised by the Dell news, they've had their head in the sand for the last couple of months." Shares of Dell finished down 1/8 at 25-1/2.

Among the overall winners Monday were biotech firms, general merchandise retailers and major regional banks. Among the worst performers were makers of telephones and communication equipment.

The Nasdaq Composite was off 12.46 points, or 0.45%, at 2,757.92. The Dow Jones Industrial Average was down by 9.35 points, or 0.09%, at 10,578.24. The broader Standard & Poor's 500 index was off 0.36 points, or 0.03%, at 1,342.90.

On Tuesday, the onslaught of earnings reports is expected to continue. Among those companies scheduled to release earnings reports are Compaq Computer Corp. (CPQ ) and drug giants - and Dow components -- Johnson & Johnson (JNJ ) and Merck & Co. Inc. (MRK ).

Treasury Market

Treasuries ended lower after the Conference Board reported leading indicators fell 0.6% in December, a larger decline than was expected. The Conference Board, however, said revisions to the data magnified the drop.

The November data was revised lower to -0.4%, previously at -0.2%. This is the third consecutive monthly decline in the index. The data may also reflect some of the rapid erosion in the economy over the last few months, according to Standard & Poor's research unit.

Stocks in the News

Shares of Amgen Inc. (AMGN ) finished solidly higher after the biotechnology giant won a major patent battle over its blockbuster drug to treat anemia: Reuters

Enron Corp. (ENE ), North America's biggest buyer and seller of electricity and natural gas, reported a sharp rise in recurring fourth-quarter earnings, surpassing expectations, as online trading helped drive strong growth at its core wholesale energy operations.

Consumer products giant Gillette Co. (G ), maker of Mach3 razors and Duracell batteries, named James Kilts, former head of Nabisco Holdings Corp. (NA ), as its new chairman and chief executive.

Athletic footwear maker Converse Inc. said it filed for bankruptcy protection and planned to end manufacturing and become an exclusive licensor of Converse products, closing three North American plants and cutting about 1,000 jobs.

World Markets

European markets finished modestly higher. London's Financial Times-Stock Exchange 100 index was up 22.70 points, or 0.37%, at 6,232. In Germany, the DAX Index was higher by 8.92 points, or 0.13%, at 6,660.45. Meanwhile, France's CAC 40 was up 37.03 points, or 0.63%, at 5,882.76.

The Asian markets finished higher. Japan's Nikkei ended up 43.30 points, or 0.31%, at 14,032.42. Hong Kong's Hang Seng Index finished with a gain of 165.72 points, or 1.04%, at 16,099.27.

By Heesun Wee in New York

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