Microsoft warning adds to stock decline

Associated Press

NEW YORK — Stock prices dipped lower today on a profit warning from Microsoft, which heightened investors' fears that an economic turnaround won't happen soon.

Hopes that earnings and the economy would improve by year-end have dimmed in recent weeks as more than 800 companies have warned of shrinking profits and many others have said that business is so uncertain that they can't make accurate projections.

The Dow Jones industrial average ended down 33.35 at 10,576.65, according to preliminary calculations. Microsoft, which blamed its pessimistic outlook on slumping PC sales, led the way, dropping $3.39 to $69.18. The market's broader indicators were also lower. The tech-laden Nasdaq composite index fell 17.22 to 2,029.37, and the Standard & Poor's 500 index slipped 4.17 to 1,210.85.

While past earnings are important, analysts say investors are more concerned with what companies, especially industry bellwethers like Microsoft, have to say about the future. The market's three major indexes this week alternated winning days with losing sessions.

Given a bevy of disappointing news from the tech sector and the Microsoft warning, analysts were encouraged that the market didn't fall harder. In fact, the market's three major indicators were little changed for the week — the Nasdaq down 2.6 percent, the S&P 500 off 0.4 percent and the Dow up 0.4 percent.

Another sign of strength was that more stocks posted gains than losses on the New York Stock Exchange today where advancing issues narrrowly outnumbered decliners 15 to 14.

"The best that can be said is that we are seeing an attempt at a bottoming. A few months ago this would have been a real problem for the market," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.