Stocks End Lower
Stocks finished lower on Wednesday after a new report on retail sales came in weaker than expected, dampening hopes for a speedy economic recovery.
Adding to the market's glum mood were comments from Federal Reserve Chairman Alan Greenspan, who said U.S. economic activity is firming. However, the Fed chairman added he sees only a gradual recovery in business investment, according to wire reports.
Prior to the session's open, the Commerce Department said retail sales edged up a seasonally adjusted 0.3% in February to $296.41 billion, coming in lower than the Street's expectations. Sales had fallen 0.3% in January. Sales excluding automobiles, or the core rate, rose 0.2% in February after a 1.2% surge in the prior month.
In addition to economic news, there was plenty of concern about lower first quarter profits. In technology, semiconductor stocks took a hit after JP Morgan cut its earnings estimates for Intel (INTC ) and Advanced Micro Devices (AMD ). Chip equipment stocks were pressured after Morgan Stanley downgraded a number of names in the group, including Novellus Systems (NVLS ) and KLA-Tencor (KLAC ).
Plus, telecom equipment stocks lost more ground after Tuesday's earnings warnings from Lucent (LU ) and Nokia (NOK ).
Among other stocks in the news, auto parts maker and defense contractor TRW (TRW ) rejected a $6 billion takeover offer from Northrop Grumman for a second time and says it intended to spin off its auto parts business.
The Dow Jones industrial average lost 130.50 points, or 1.23%, to 10,501.85. Among the biggest Dow losers were Intel (INTC ), IBM (IBM ), Citigroup (C ) and International Paper (IP ).
The Nasdaq Composite Index shed 35.08 points, or 1.85%, to 1,862.04, hurt by Intel (INTC ), Dell (DELL ) and Cisco Systems (CSCO ) among others. The broader Standard & Poor's 500 Index slipped 11.51 points, or 0.99%, to 1,154.07. The worst-performing groups included semiconductors and telecom equipment makers.
U.S. Treasuries finished mixed. The retail sales numbers prompted many market players to seek more stable investments than equities.
European markets closed mixed, with the buying mood tempered after the weaker than expected U.S. retail sales data, which has moderated perceptions of a strong economic recovery. In London, the Financial Times-Stock Exchange 100 index closed up 19.50 points, or 0.37%, to 5,272. In France, the CAC 40 finished down 26.88 points, or 0.59%, to 4,523.77. In Germany, the DAX Index was off 29.82 points, or 0.57%, to 5,245.99.
In Asia, the markets ended with losses. The Nikkei fell 192.02 points, or 1.65%, to 11,415.31, as profit-taking mushroomed after a sharp rise earlier this week. Also, the Nikkei failed to show any positive reaction to an announcement the Government Pension Investment Fund (GPIF) plans to invest some funds in domestic stocks in fiscal year 2002. And in Hong Kong, the market lost 56.36 points, or 0.50%, to 11,217.50.
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