Varied forecasts dampen market gains
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By Amy Baldwin
Associated Press
NEW YORK — Divergent signals on the state of business left investors cautious and prices mixed on Wall Street today. Upbeat comments from Microsoft and Tiffany encouraged the market, but disappointing statements from Gateway, Ciena and AOL Time Warner limited stocks' ability to advance.
Blue chips were weaker, falling back moderately after weeks of rallying, but tech shares managed modest gains.
As companies begin releasing fourth-quarter sales and earnings and some warn of weaker results, analysts said a pullback is to be expected with investors cashing in profits from recent rallies.
The Dow Jones industrial average closed down 46.50, or 0.5 percent, at 10,150.55, according to preliminary calculations, after falling 62.69 yesterday to quash a three-session, 238-point winning streak.
"We have earnings season upon us and you are seeing some profit taking, but I don't think it is anything serious. ...The Dow hasn't shown any conviction on the downside," said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky.
The Dow's slippage today was smaller than the 175 points it has gained so far in 2002. Additionally, the Dow has risen nearly 24 percent from its low following the Sept. 11 terror attacks.
The broader market was mixed. The Nasdaq composite index rose 18.63, or 0.9 percent, to 2,055.73, but the Standard & Poor's 500 index fell 4.18, or 0.4 percent, to 1,160.71.
Gateway slid 25 percent, down $2.56 at $7.69, on a fourth-quarter revenue warning.
Ciena fell $1.05 to $15.70 after chief executive Gary Smith was quoted by Dow Jones News Service as saying sales for the company, along with other telecom equipment makers, won't rebound in the first quarter.
AOL Time Warner, which reduced its 2002 earnings forecast, stumbled 68 cents to $32.
While investors' increasing confidence in a healthier economy this year has boosted stocks, analysts say the market's upside will be limited until there are concrete signs of a turnaround.
Upscale jeweler Tiffany climbed $1.95 to $34.84 after saying its fourth-quarter earnings will be at the high end of previous estimates.
Upbeat comments from Microsoft chairman Bill Gates helped the tech sector shake off the disappointments from Gateway and Ciena. In a keynote speech at the International Consumer Electronics show in Las Vegas, Gates said Microsoft sold 1.5 million Xbox units during the holiday season, and claimed it was the most successful game console launch ever. Microsoft expects to sell 6 million consoles by the end of 2002.
Microsoft rose 82 cents to $69.38, and its strength spread to other tech bellwethers. IBM gained 65 to $124.70, and Intel rose 37 to $35.58.
Analysts said the market's downside was limited by news from the Commerce Department, which reported orders for a wide range of manufactured goods — including metals, machinery, cars, computers and household appliances — rose in November. Overall, orders to U.S. factories fell by 3.3 percent in November, but virtually all the weakness stemmed from a huge drop in demand for military airplanes.
Declining issues narrowly outnumbered advancers 16 to 15 on the New York Stock Exchange. Volume was 1.23 billion shares, below the 1.30 billion shares traded yesterday.
The Russell 2000 index, the barometer of smaller company stocks, rose 4.71, or nearly 1 percent, to 497.89.
Overseas, stocks traded lower with Japan's Nikkei stock average finishing the day down 2.3 percent. In Europe, France's CAC-40 closed down 1.0 percent, Britain's FT-SE 100 fell 0.8 percent and Germany's DAX index slipped 0.1 percent.
