Stocks Finish Lower

Earnings reports from Microsoft and others will be the focus Friday

Stocks finished lower as the latest batch of earnings reports sent conflicting signals on the recovery in corporate profits. However, the major averages managed to climb off earlier lows on news that a small tourist plane accidentally crashed into a skyscraper in Milan, Italy.

The Dow Jones industrial average fell 15.50 points, or 0.15%, to 10,205.28. The Nasdaq Composite index was down 8.24 points, or 0.46%, to 1,802.43. And the broader Standard & Poor's 500 index, meanwhile, fell 1.60 points, or 0.14%, to 1,124.47.

Stocks had dropped quickly on news of the plane crash at midday, but then slowly recovered in the afternoon as reports came out that it was an accident and not a terrorist attack. Before the plane crash, investors were already in selling mode amid disappointing earnings outlooks from companies such as Nokia (NOK ).

Nokia shares fell after the company reported first quarter EPS (pro forma) of 0.19 EUR, vs. 0.22 EUR, on a 12% sales decline. The Finnish mobile phone maker cut its sales growth forecast for 2002 to 4%-9%, down from its earlier forecast of about 15%. The news dragged other telecom stocks lower on Thursday.

A few earnings reports from widely-followed tech stocks after the market close should hang over the market on Friday. Microsoft (MSFT ) posted third quarter EPS after the market close of $0.49 (including a gain and a charge). The software giant also says it expects its June quarter EPS to be $0.41-0.42, below the $0.44 consensus estimate. The shares were falling in after-hours trading.

Sun Microsystems (SUNW ) reported a narrower than expected loss of $0.01 per share. Quarterly revenue was a bit weaker than expected, falling 24% to $3.10 billion.

Compaq (CPQ ) posted first quarter EPS of $0.04, beating the consensus estimate by three cents. Ebay (EBAY ) also reported results that beat analysts' forecast after the bell.

On Friday, big-name companies scheduled to report earnings include BellSouth (BLS ), International Paper (IP ), Tribune (TRB ), and UAL (UAL ).

On Thursday, defense stocks skidded after Boeing (BA ), reported disappointing first quarter results. The stock was the biggest loser on the Dow. Honeywell International (HON ) reported lower EPS on a 12% revenue decline. On a conference call, the company reportedly said that second quarter EPS will be flat from a year ago at $0.55, which would be lower than expected. United Technologies (UTX ) also slumped after it reported a 4.5% drop in quarterly sales.

Drug maker and Dow member Merck (MRK ) reported first quarter EPS of $0.71, flat from a year earlier and in line with estimates. Sales rose 7.3% to $12.2 billion.

Fast-food chain McDonald's (MCD ), also a Dow component, reported first quarter EPS (before charges) of $0.31, above the consensus $0.29 forecast. Revenue rose 2.4% to $3.6 billion, but net income fell amid continued weakness in Latin America. The stock rose and was sparking other restaurant stocks higher.

After the market close Wednesday, IBM (IBM ) reported first quarter EPS of $0.68, vs. $0.98 a year ago, on a 12% revenue decline, in line with its reduced outlook last week. Big Blue said it expects to meet the 2002 consensus EPS estimate of $4.16. And Apple Computer (AAPL ) reported second quarter EPS of $0.11, vs. $0.12, on a 4% sales rise thanks to strong demand for its new flat-screen iMac.

Treasury Markets

U.S. Treasuries closed higher in price. Weak economic data helped buoy bonds, but the entire curve spiked after news of the small plane crashing in Milan. When it was determined to be most likely an accident, traders sold the safety flight bid that had developed. By the close, though, most bonds finished in the green, says S&P MMS.

In economic news, weekly jobless claims rose 1,000 to 445,000. The index of leading economic indicators rose 0.1%, a bit weaker than expected.

And the Philadelphia Federal Reserve index improved to 12.3 in April from 11.4 in March. New orders rose to 12.8 from 7.3 and shipments came in at 16.4 from 7.7. The report was roughly in line with expectations and is consistent with a recovering manufacturing sector, says S&P MMS.

There are no economic reports on the calendar for Friday.

World Markets

European stock markets were lower. In London, the Financial Times-Stock Exchange 100 index closed down 34.50 points, or 0.66%, to 5,229.40, as investors pondered the new U.K. budget and tax proposals.

In France, the CAC 40 lost 8.47 points, or 0.18%, to 4588.83. And in Germany, the DAX Index fell 55.67 points, or 1.05%, to 5,262.88 amid a lower U.S. market and uncertainties over U.S. economic strength.

In Asia, the markets ended higher. Japan's Nikkei gained 32.02 points, or 0.28% to close at 11,575.73 as telecom, retailers and other market heavyweight stocks rose on the heels of continued buy-orders from domestic pension funds, but technology shares sank on earnings jitters prior to Microsoft's announcement of results. In Hong Kong, the Hang Seng surged 126.57 points, or 1.14%, to close at 11,217.15.

Before it's here, it's on the Bloomberg Terminal.