Stocks, Led By Techs, Finish Lower
Stocks ended Monday's session down sharply as investors waded into a hectic week of earnings reports and digested downgrades on brand-name tech stocks from major investment houses.
The Dow Jones Industrial Average finished down 47.69 points, or 0.45%, at 10,532.16. The Nasdaq Composite index fell 104.05 points, or 4.81%, to 2,059.36. Meanwhile, the broader S&P 500 lost 18.63 points, or 1.50%, to 1,224.35.
This week will be the busiest for corporate first-quarter earnings reports with 156 companies from the Standard & Poor's 500 index releasing results. Most analysts are hopeful that any potential disappointment are already priced into stocks by warnings and lowered expectations in recent weeks, but with a nervous outlook resumed, investors could put a big dent in the market's recent uptick.
As of Friday, the Nasdaq Composite Index was up 33% from its lowest point this year. But that was bound to end, says Dan Perris, senior analyst at Argus Research, who notes that technology stocks in recent weeks were overbought. "I would expect to see continued weakness in tech over the next few day. There will be plenty of earnings this week, but the thrust of news is already out there."
Among the companies who posted results Monday morning were Dow index components Exxon Mobil (XOM ) and Minnesota Mining & Manufacturing (MMM ). Top U.S. oil company Exxon posted profits that hit the high end of the Street's expectations on strong crude oil and natural gas prices. Meanwhile, 3M reported strong first-quarter earnings, but said it will take a charge to pay for a restructuring plan.
Meanwhile semiconductor stocks led technology stocks lower after Merril Lynch downgraded several chipmakers, including No. 1 chip company Intel Corp. (INTC ), noting that there is little evidence of a turanaround in that industry. Lehman Brothers cut its rating on software giant Oracle (ORCL ), forecasting a weak second quarter.
Other stocks in the news today included PepsiCo Inc. (PEP ). The maker of soda and snack foods said before the open its profits jumped 18% in the first quarter.
Last Wednesday, the Federal Reserve gave the market a shot in the arm with a surprise inter-meeting interest rate cut of 50 basis points. The market soared Wednesday and Thursday, but now investors are likely to see that the Fed's actions -- four rate cuts year to date -- will not have an effect on lagging corporate profits and slowing consumer spending until at least a half year after the fact.
U.S. Treasuries finished higher on weakness in the equity market. No economic data are set to be released Monday. On Tuesday traders will look to April consumer confidence numbers, which are expected to be off 3.7 points.
Stock markets in Europe ended down in line with the U.S. equities market. London's Financial Times-Stock Exchange 100 index ended down 8.50 points, or 0.14%, to 5,871.30. In Germany, the DAX Index ended off 76.49 points, or 1.25%, at 6,051.48. In France, the CAC 40 ended down 52.49 points, or 0.96%, to 5,396.85.
Asian markets finished lower. Japan's Nikkei 225 indes finished down 50.07 points, or 0.36%, to 13,715.60. Hong Kong's Hang Seng Index fell 135.63 points, or 1.02%, to 13,311.50.
By Amy Tsao in New York