Posted at 11:32 a.m., Tuesday, April 9, 2002
Tech stocks fall on lower profit report
By Amy Baldwin
It was the second time tech investors were worried about the possibility of an earnings warning. On Friday, tech shares fell on rumors of an IBM warning which the computer company made yesterday, forecasting weaker-than-expected first-quarter profits and revenue.
The Dow Jones industrial average ended down 40.41, or 0.4 percent, at 10,208.67, according to preliminary calculations.
The broader market recorded steeper losses. The tech-dominated Nasdaq composite index fell 43.36, or 2.4 percent, to 1,742.51, having advanced 15.84 yesterday. The Standard & Poor's 500 index declined 7.50, or 0.7 percent, to 1,117.79.
Investors have been selling stocks for three weeks due to their qualms about earnings and the economy and concerns about the Mideast conflict.
Analysts said there's little reason to buy, although there has been sporadic bargain hunting as stock prices have fallen to more attractive levels. For investors to commit to the market, they need companies to report solid first-quarter earnings and they must hear more positive assessments of future results.
"We are starting to move to better results but that takes time," said Brian Belski, fundamental market analyst at US Bancorp Piper Jaffray, adding that investors will continue to be cautious until earnings show definite improvement. "People want to be able to reach and touch those results to make sure they are real."
Cisco Systems fell $1.36 to $14.82 after RBC Capital Markets lowered its third-quarter estimates on the networking stock, citing a continued slump in capital spending on information technology. Later in the session, rumors spread on Wall Street that Cisco would be the next big tech company to warn about profits.
Other tech losers included Microsoft fell $2.35 to $54.87, and Intel declined $1.47 to $28.46. Yahoo! stumbled 38 cents to $18.46 ahead of its earnings due out tomorrow.
But Dow industrial IBM rose 33 cents to $87.74, a meager recovery from yesterday's $9.84 loss.
Among today's winners, Wendy's gained $1.36 to $37.30 after raising its fiscal 2002 earnings estimate. Lehman Brothers, Goldman Sachs and Credit Suisse First Boston also raised various earnings estimates for the fast-food company.
Positive growth prospects boosted Wal-Mart, up 32 cents at $60.10. Salomon Smith Barney said it expects the retailer to record 13 percent profit growth over the next three to five years. The brokerage initiated coverage of the retailing stock today with a "buy" rating.
Advancing issues outnumbered decliners 17 to 14 on the New York Stock Exchange. Volume was light at 1.21 million shares, but ahead of yesterday's 1.10 billion.
The Russell 2000 index, the barometer of smaller company stocks, finished unchanged at 503.01.
Japan's Nikkei stock average fell 2.1 percent. France's CAC-40 rose 0.7 percent, while Germany's DAX index and Britain's FT-SE 100 were essentially unchanged.