Mixed signals made for muddled markets today as solid earnings reports battled interest-rate jitters. In the end, fear of the Fed won out as stocks took a dip in the red.
After yesterday's rally left the
Dow Jones Industrial Average
Nasdaq Composite Index
up more than 200 points, investors took a breather and exercised caution ahead of tomorrow's key economic reports. The Dow was the biggest loser, falling 179.3, or 1.6%, to 10, 945, while the tech-laden Comp was spared some of that pain, dipping 81.2, or 2.2%, to 3630. The broader
fell 16.45, or 1.1%, to 1460.99, while the small-cap Russell
slipped 4.79, or 1%, to 484.24.
The selling "started out kind of gradually and then got worse," said Adam Wagner, president of
Wagner Hermann & Herbst
, in Houston. With a lot of big numbers coming out tomorrow, "the market at large has a memory of about an hour," he said. "Take it all with a grain of salt."
The market's cautious tone was a result of the upcoming
Employment Cost Index
Gross Domestic Product
reports which will be released at 8:30 am EST tomorrow. Many think the first-quarter reports will show continued strong growth in the U.S. economy, raising the possibility of further interest-rate hikes from the Federal Reserve in the months to come. Analysts believe the ECI will show labor market pressures are pumping up growth in wages and benefits, while GDP growth estimates have been lifted in recent weeks based on robust consumer spending. Investors were not taking any chances ahead of the numbers.
Still, Jay Meagrow, vice president of trading at
in Cleveland, said the selling was much calmer than the type of action seen in recent weeks.
"We've been a little quiet and just kind of listing and not doing anything big," he said as markets headed into the last hour of trading, also noting thinner-than-usual trading volume. Meagrow contrasted the mood with recent selloffs he characterized as substantial and quick. Overall, earnings reports have been very good and that's what people are trading on, he said.
Weakness in the Dow stretched across a range of sectors with
Procter & Gamble
among the biggest losers.
Minnesota Mining & Manufacturing
took it on the chin for a second straight day, over disappointment about its revenue forecasts. 3M dropped 4 7/8, or 5.2%, to 88 15/16, further damaging the stock after yesterday's five-point dive.
TheStreet.com Internet Sector
index also succumbed to profit-taking after yesterday's little celebration, losing 14.7, or 1.8%, to 803.8. Net bellwether
slipped 1.2% while
dropped 5 3/8, or 4.3%, to 119 1/8.
bucked the trend though, gaining 1 1/16, or 2%, to 53 1/2 ahead of its first-quarter earnings report due out after the close.
Oil stocks were on the rise, powered by a group of strong earnings reports, the latest of which came from
, which said its profits rose four-fold as decade-high oil prices in the first quarter boosted revenues. Chevron rose 1 1/2 to 86 5/16.
made positive comments on
, lifting its rating to buy from attractive citing the company's current valuation. The
Philadelphia Stock Exchange Oil Service Index
rose 1.96, or 1.8%, to 111.75.
After yesterday's strong performance, financial stocks were fighting off fear of the Fed, with the
American Stock Exchange Broker/Dealer Index
slipping 6.65, or 1.4%, to 474.54 and the
Philadelphia Stock Exchange/KBW Bank Index
shedding 18.56, or 2.3%, to 801.42.
Falling Dow financials included
which lost 2.1%, and
which fell 3.1%.
Breadth was mixed on moderately heavy volume.
New York Stock Exchange:
1,408 advancers, 1,530 decliners, 991.4 million shares. 54 new 52-week highs, 49 new lows.
Nasdaq Stock Market:
1,813 advancers, 2,324 decliners, 1.565 billion shares. 44 new highs, 92 new lows.