Stocks' Southern Migration Continues - TheStreet

Updated from 11:43 a.m. EST

Stocks were again heading south Thursday afternoon, as investors continued to navigate the threat of war and terrorism and ignore reasonably sound economic data.

The

Dow Jones Industrial Average

was recently down 84 points, or 1.1%, at 7674, while the

Nasdaq

was off 11 points, or 0.9%, at 1268. The

S&P 500

was down 8 points, or 1%, at 811. Treasuries rallied, with the 10-year note up 19/32 to yield 3.86%.

Sowing anxiety in the market Thursday was speculation that U.N. weapons inspector Hans Blix will tell the Security Council tomorrow that Iraq hasn't complied with demands to disclose banned weapons as required by U.N. resolution 1441. Increased police and military presence on the streets of New York and Washington also had participants on edge

"The anxiety from these terrorism threats have a lot of people on edge and its just hard to get excited about buying stocks," said Sean Martin, head trader at A. Gary Schilling. "The tendency is to seek safety. And I wouldn't even say the markets are falling from selling, just a lack of buying, and short sellers can drive it lower."

And with crude oil exceeding the $33 a barrel price tag for the first time in two years following a report by the U.S. Department of Energy showing inventories fell to their lowest levels since 1975, Martin says the consumer is starting to feel the heat. "These things have skyrocketed and people are getting these huge winter heating bills right about now," he said. "That's a fairly large tax on the consumer at a time when they can't handle it."

The government's report on January retail sales came in worse than expected when including auto sales, but stronger than expected when those are factored out. Overall, retail sales dropped 0.9% in the month. But they rose 1.3% excluding autos, and December's headline number was upwardly revised to a 2% gain.

Meanwhile, first-time claims for unemployment benefits fell more than expected.

Office Depot

(ODP) - Get Report

reported fourth-quarter earnings of 23 cents a share, topping analyst estimates by a penny. Revenue came in at $2.84 billion, missing Wall Street expectations by $70 million. Going forward, Office Depot says that 2003 earnings will grow between 5% and 10% over 2002's levels. Shares fell 9.9% to $11.64, while shares in rival

Staples

(SPLS)

slid 3.3% to $16.47.

Calpine

(CPN)

announced fourth-quarter earnings before charges of 9 cents a share, matching analyst expectations, on $1.9 billion in revenue, up nearly 30% from year-ago levels. But in 2003, the company said earnings would come in between 40 cents and 50 cents a share, lower than current consensus of 66 cents. Calpine fell 2.3% to $3.

Biopure

( BPUR) rose 20.5% to $4.06 after announcing it will get another $4 million from Congress to work on clinical trials of Hemopure, a bloodlike substitute that is stable at room temperature.

Woes at blue-chip

McDonald's

(MCD) - Get Report

continue, with shares off 2.2% to $13.53 after J.P. Morgan told investors to avoid the company's stock until the company gets more visibility and a better long-term strategy. The brokerage also said that higher domestic January sales were offset by the rapid deterioration in European sales, which account for 30% of operating income.

Campbell Soup

(CPB) - Get Report

announced second-quarter earnings of 56 cents a share, topping Wall Street estimates by a penny on a 6% year-over-year revenue increase. Shares dipped 1.3% to $21.59.

May Department Stores

( MAY) announced fourth-quarter earnings of $1.28 a share, excluding all items, topping the $1.20 a share expected by analysts. But in a sign of how difficult the retail environment is, revenues came in at $4.37 billion, off 4.6% from last year and $80 million short of Wall Street expectations. Shares gained 1.6% to $19.36.

Barrick Gold

(ABX)

announced fourth-quarter earnings of 13 cents a share, beating the 9-cent analyst estimate. Late Wednesday night, the company announced its CEO would be replaced. Shares gained 3.2% to $16.20.

Repligen

(RGEN) - Get Report

rose 3% to $3.13 after announcing that the FDA gave one of its experimental medications, RG2133, orphan drug status to combat mitochondrial disease. If approved, Repligen receives seven years of exclusive rights to the drug.

Baker Hughes

(BHI)

reported fourth-quarter earnings of 25 cents a share, matching Wall Street consensus, but revenue came in at $1.29 billion, off 1.8% from the year-ago quarter. Shares fell 4.4% to $29.35.

Express Scripts

(ESRX)

fell 3.8% to $47.45 after the company disclosed it received a letter from the SEC over disclosure in its filings with the government, specifically that it may have underreported revenue. Shares fell despite the fact that brokerage SG Cowen defended the company, telling investors to buy on weakness.

Amazon.com

(AMZN) - Get Report

dropped 6.7% to $19.71 after a report in

The Wall Street Journal

said that state deficits are so bad that Internet sites will soon start collecting sales tax.

Intel

(INTC) - Get Report

gained 0.1% to $15.17 after a report said that the company's new Manitoba chip might enable the company to erase the head start that wireless chipmakers

Texas Instruments

(TXN) - Get Report

and

Qualcomm

(QCOM) - Get Report

have in the space. The news pressured Qualcomm the most, with shares off 8.3% to $33.53.

Hasbro

(HAS) - Get Report

, the second-largest toymaker in the U.S., also said fourth-quarter earnings rose to $62.2 million, or 36 cents per share, from $52.5 million, or 30 cents per share, a year earlier. Shares rose 5% to $11.85.

AIG

(AIG) - Get Report

, the world's largest insurer, reported a net loss of $103.8 million, or 3 cents a share, in the fourth quarter, reflecting a big but expected charge to cover underestimated insurance liabilities. In the year-ago period the company earned $1.87 billion, or 70 cents a share. Shares rose 3.9% to $48.30.

On the analyst front,

Schering-Plough

( SGP) was down 0.1% at $18.03 after Sanford Bernstein upgraded it to market perform from underperform.

Lucent

( LU) fell 5.3% to $1.60 after RBC Capital downgraded it to underperform from sector perform.

The dollar fell against the euro and the yen, reflecting the unease over the possibility of war against Iraq. The risk of war has already damped the demand for U.S. assets, leading international investors to dump the dollar in favor of other strong currencies.

Overseas markets were lower. London's FTSE 100 closed down 0.2% at 3611, and Germany's Xetra DAX was off 0.8% at 2552. In Asian exchanges, Japan's Nikkei fell 0.74% to 8599, while Hong Kong's Hang Seng dropped 1.52% to 9173.