Posted at 12:48 p.m., Tuesday, June 19, 2001
Earnings worries keep market flat
Associated Press
NEW YORK — Concerns about weak company profits ruled Wall Street again today, foiling the market's attempts to rally on bullish comments from tech bellwether Oracle.
Blue chips fell, while technology stocks were more mixed, but the market overall ended the session flat. Analysts weren't surprised, noting the rest of the nation's business picture remains murky.
"For every Oracle there are still companies out there that are indicating difficulties with near-term earnings," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.
The Dow Jones industrial average closed down 48.71 at 10,596.67, according to preliminary calculations, despite an earlier gain of 94 points.
Broader stock indicators also struggled. The Nasdaq composite index rose 4.03 to 1,992.66, halting a seven-session losing streak, but still closing below 2,000 for a second straight day.
The Standard & Poor's 500 index rose 4.15 to 1,212.58.
Today's declines followed an early session rally on Oracle's news that its U.S. outlook might be improving.
Analysts said those gains did not last because they reflected an automatic snapback that occurs after strong selling, rather than any shift in market sentiment.
Technology stocks have been battered in recent weeks by earnings warnings from companies including Nokia and Sun Micro-
systems. Oracle's projections weren't enough to convince Wall Street the worst was over.
"Investors are not confident right now, and that's the problem," Cripps said.
Oracle rose $1.92 to $16.76, a 13 percent increase, on slightly better-than-expected fiscal fourth-quarter results.
But the broader sector was choppier. Big losers of the session included Ciena, down $2.12 to $36.74, and Dow component Hewlett-Packard, off 71 cents at $26.
The Dow also was hurt by losses in Honeywell and General Electric, after a top GE executive said there is zero chance its $41 billion acquisition of Honeywell will proceed, based on stiff opposition from European regulators. Honeywell fell $1.50 to $38.50, while GE lost 13 cents to $48.87.
One bright spot on the market: Financial stocks, lifted by gains in issues including Citigroup, were up 96 cents at $50.75.
The market's malaise appears likely to continue through at least the summer. Although the Federal Reserve is expected to lower interest rates next week for a sixth time this year, most market experts doubt it will have much effect on stocks, if any.
They say investors are more focused on profit outlooks. The huge stock rally this spring came on hopes that a business turnaround would occur by year's end. Those hopes are rapidly fading amid poor earnings news and weak economic data.
"The conventional wisdom is that six months after the beginning of a rate cut cycle, we should start seeing benefits. But it's been five solid months since the Fed began cutting rates, and we're not seeing that," said Brian Bel-
ski, fundamental market strategist at US Bancorp Piper Jaffray.
"Instead the market has received a reality check in terms of fundamentals and what it looks like for growth in tech over next couple of quarters. Business clearly has not turned positive yet."
The Russell 2000 index fell 1.80 to 488.73.
Advancing issues traded nearly evenly with decliners on the New York Stock Exchange. Volume came to 1.17 billion shares, compared with the nearly 1.10 billion shares yesterday.
Overseas, Japan's Nikkei stock average fell nearly 1.0 percent. European shares fared better. Germany's DAX index advanced 0.9 percent, Britain's FT-SE 100 gained nearly 0.2 percent, and France's CAC-40 was up 0.8 percent.
