Bears chase away the bulls

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWalnut’s Malik Khouzam voted Southern California Boys Athlete of the Week160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! NEW YORK (AP) – Wall Street suffered a sharp reversal Thursday, with the Dow Jones industrials dropping 133 points as concerns over corporate profits and economic growth reasserted themselves. Wednesday’s rally, which sent the Dow up 128, proved short-lived as Pfizer Inc. withdrew its profit forecasts for 2006 and 2007, increasing investors’ worries about the vulnerability of corporate profits. Intel Corp. spurred such jitters earlier this week in lowering its forecast for sales of its computer chips. Members of the Federal Reserve’s interest rate-setting committee also fed inflation concerns, leading investors to wonder whether a continued rise in interest rates would slow the economy too much and lead to more corporate profits shrinking. “Yesterday was a pretty good up day, but we were well oversold, so we shouldn’t probably get too excited about that,” said Linda Duessel, market strategist at Federated Investors in Pittsburgh. “This is just the beginning of the heavy earnings results from the third quarter, and from everything we’re seeing so far, the results are pretty mixed, but guidance in general is kind of cautious for the fourth quarter.” The Dow fell 133.03, or 1.28 percent, to 10,281.10 after gaining 128 points on Wednesday. Broader stock indicators also pulled back. The Standard & Poor’s 500 index lost 17.96, or 1.5 percent, to 1,177.80, and the Nasdaq composite index dropped 23.13, or 1.11 percent, to 2,068.11. Bonds lost ground, with the yield on the 10-year Treasury note rising to 4.48 percent from 4.44 percent late Wednesday. The dollar was lower against most major currencies, while gold prices also fell. Oil prices fell sharply despite concerns about Hurricane Wilma, due to enter the Gulf of Mexico by the end of the week. A barrel of light crude settled at $61.03, down $1.38 on the New York Mercantile Exchange – a sharp drop, but one that had little effect on stocks. “Energy prices really have fallen to a distant second as far as concerns for the market,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “The big concern is whether the Federal Reserve is going to keep raising interest rates and, if they do, whether that’s going to slow the economy too much.” The Conference Board said its index of leading indicators, which attempts to forecast future growth, fell 0.7 percent for September, worse than the 0.5 percent drop expected by economists. The index slipped 0.2 percent in August. In earnings news, Pfizer said profits fell 52 percent in the third quarter due to acquisition costs. While the company beat Wall Street forecasts for earnings before items, revenues were below expectations. That, combined with the company’s lowered forecasts, sent Pfizer shares tumbling $2.07, or 8.6 percent, to $21.90. Dow component McDonald’s Corp. slid $1.29 to $32.40 after the fast-food chain met Wall Street’s profit forecasts, though overall profits fell 6 percent for the quarter. Strong international sales helped the Coca-Cola Co. post a 37 percent increase in profits. Shares of the beverage maker, which beat analyst earnings estimates by 4 cents per share, rose 30 cents to $42.10. SBC Communications Inc. added 13 cents to $22.54. The Dow industrial said costs associated with its pending acquisition of AT&T Corp. and hurricane damage at its Cingular Wireless joint venture dragged profits down 40 percent. But the company nonetheless beat Wall Street profit estimates by 7 cents before one-time charges. Growing global cell phone demand pushed Nokia Corp.’s profits up 29 percent for the third quarter, helping the Finnish manufacturer beat Wall Street estimates by a penny per share. Revenues, however, failed to meet expectations, and Nokia dropped $1.15, or 6.7 percent, to $15.90. Ford Motor Co. slipped 5 cents to $8.42 after posting an expected loss. Sluggish North American sales hurt the automaker, which said its full-year profit would come in at the low end of previous estimates. The company also said it would announce plans in January for a new round of plant closures and job cuts. Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.64 billion shares, compared with 2.69 billion traded on Wednesday. The Russell 2000 index of smaller companies fell 10.74, or 1.68 percent, to 627.54. Overseas, Japan’s Nikkei stock average rose 0.5 percent. In Europe, Britain’s FTSE 100 closed down 0.07 percent, France’s CAC-40 gained 0.36 percent for the session, and Germany’s DAX index rose 0.38 percent.last_img

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