'Overwhelming caution' pushes Wall Street lower

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By Hope Yen
Associated Press

NEW YORK — Mixed earnings news from Intel jolted Wall Street today, sending stocks sharply lower as investors unloaded stocks on worries that corporate profits might not be so strong after all.

Analysts said the chip giant's plans to lower capital spending dampened investors' hopes of a resurgent economy in the coming months, while a bleak outlook from DuPont added to the pessimism.

"There is a recovery and companies are hitting the numbers, but maybe the Street was overoptimistic as to capital spending for the tech sector," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "It isn't coming on with the vigor people need to give satisfactory profits."

The Dow Jones industrial average declined 119.44, or 1.4 percent, to close at 8,723.18, according to preliminary calculations, having gained 56 points yesterday.

The broader market also fell. The Nasdaq composite index dropped 22.19, or 1.5 percent, to 1,438.80. The Standard & Poor's 500 index fell 13.44, or 1.4 percent, to 918.22.

Intel, a Dow component, dropped 44 cents to $17.35 after it reported fourth-quarter earnings that beat analysts' expectations; however, the chip maker said capital spending in 2003 will range between $3.5 billion and $3.9 billion, down from $4.7 billion in 2002.

The news hurt other tech stocks, including Applied Materials, which fell 91 cents to $14.45, and KLA-Tencor, which dropped $1.20 to $38.45.

Meanwhile, DuPont, another Dow component, lost $1.50 to $42.50 after the company lowered its fourth-quarter earnings forecast, citing weaker-than-expected operating results in the second half.

The news "shows the overwhelming caution that exists in corporate America," said Pradilla, adding that tensions with Iraq and North Korea also continue to weigh heavily on investors' minds.

"It doesn't mean a new bear market, but just that we will be in a terrible trading range for quite some time," he said.

Investors are closely watching this week's earnings announcements for signs that the economy is strengthening. Analysts say that while the market has been somewhat resilient in recent days, disappointing profit news could quickly change that dynamic.

Still, many analysts believe the market is generally moving upward.