Profit fears help push stocks down
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Bloomberg News Service
NEW YORK — U.S. stocks fell for the first time in four days as investors said profits may not rebound soon enough to justify the rally of the past 3 1/2 months. General Electric Co. and Coca-Cola Co. led the Standard & Poor's 500 Index lower after analysts downgraded their shares.
Chipmakers including Texas Instruments Inc. and Xilinx Inc. fell after the Philadelphia Semiconductor Index leaped almost 10 percent in the first trading week of the year.
"People may be a little too optimistic on the timing" of the recovery, said Kevin Bannon, chief investment officer at BNY Asset Management, which oversees $66 billion. "This might be a more challenging year for profits than people expect."
Gains by media companies, led by AOL Time Warner Inc., limited declines in the S&P 500 and Dow Jones Industrial Average.
The S&P 500 fell 6.23, or 0.5 percent, to 1166.28. The Nasdaq Composite Index dropped 11.69, or 0.6 percent, to 2047.95. The Dow lost 45.53, or 0.5 percent, to 10,214.21.
Optimism that 11 interest-rate cuts by the Federal Reserve last year will revive profit growth and relief over the ouster of the Taliban in Afghanistan sent the S&P 500 up 21 percent since Sept. 21 and the Nasdaq up 45 percent. Some investors and analysts say earnings may not revive as swiftly as those gains suggest.
"The stock rally is sucking us into believing that (corporate technology) spending is somehow recovering already," said Pip Coburn, technology strategist at UBS Warburg. Fewer technology companies have said their fourth-quarter results missed forecasts compared to the same time following the third quarter, Coburn said, and that has buoyed investors.
The Russell 2000 Index of smaller stocks dropped 1.80, or 0.4 percent, to 497.50.
