Posted on: Wednesday, January 12, 2005
Profit pessimism deflates stock trading
By Meg Richards
Associated Press
NEW YORK — Stocks sagged yesterday as a disappointing sales forecast from Advanced Micro Devices Inc. sparked pessimism about semiconductor issues, putting buyers on the run.
"There's a sense that nobody wants to buy right now. It's earnings week, the numbers have been choppy at best ... I think people are just waiting to see how things shape up," said Michael Murphy, head trader at Wachovia Securities in Baltimore. "I'm not seeing a lot of selling, it's more a case where people have their wallets on their hip. There's no urgency."
Despite the losses, analysts weren't overly alarmed by the day's trading, or the fact that the major indexes are all down for the year — traditionally a negative indicator for Wall Street. Market fundamentals remain strong, and there have been enough exceptions to January's so-called "early warning" system to question its accuracy, said Richard Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Fla.
"I think the jury is still out as far as which way this thing is going to go. We think the correction has further to run, how far I have no idea," Dickson said. "But once this correction runs its course, we think then the market runs higher again."
The prospect of flagging revenues and profits in the chip sector failed to cheer investors following a weak start to the fourth-quarter earnings season. Less-than-stellar results from Alcoa Inc. and Genentech Inc. — the first two major companies to report — inspired little conviction.
