At the start of a jam-packed week, the major averages closed lower as buyers stayed on the sidelines and profit fears kept optimism in check.
Last week's rally, led by an upbeat forecast from
wasn't a rock on which to build Monday. Investors grew nervous about the barrage of earnings releases due this week and took profits, pulling the market indices lower. With the possibility of a second-half recovery fading in many minds, investors will be focused on any details corporate America offers about the rest of the year.
Dow Jones Industrial Average closed off 67 points to 10,472. The
Nasdaq Composite Index ended off 56 points, or 2.7%. Biotechnology stocks and chipmakers conspired to drag the Nasdaq lower, while the Dow's early morning strength eroded well before the closing bell. Of the Dow's 30 components, 18 ended the session lower.
Banking and financial services heavyweight
gained 29 cents, or 0.6%, to $49.15 after delivering earnings that topped estimates, despite deteriorating loan quality and sluggishness in the investment-banking business. Citigroup posted second-quarter earnings of 74 cents a share, beating analysts' estimates by a penny. The bank said its international consumer operation buoyed profits.
Bank of America
also beat estimates, coming in with earnings of $1.24 a share. Analysts were expecting $1.18.
Consider Citigroup an appetizer. The blue-chip earnings smorgasbord comes tomorrow, when
release their earnings. On Wednesday,
J.P. Morgan Chase
will report. Microsoft,
AOL Time Warner
are also slated to offer their results this week.
On the whole, banking stocks didn't perform that well. The
Philadelphia Stock Exchange/KBW Bank Index
Bank of New York
said second-quarter earnings were up 8% from the year-ago period to 52 cents a share. Excluding amortization, goodwill and intangibles, the company posted income of 54 cents a share. Analysts were expecting earnings of 53 cents, according to
Thomson Financial/First Call
. Bank of New York dropped 13%.
Few sectors showed much strength, as profit-taking became the en vogue afternoon activity. Transports and airlines gained ground, and both the
Dow Jones Transportation Average
American Stock Exchange Airline Index
, were positive, thanks to solid earnings from
. Continental reported earnings of 74 cents a share, compared with estimates of 58 cents, and gained 2.2% as a result. Several transportation companies will be reporting this week, including
American Stock Exchange Biotechnology Index
Philadelphia Stock Exchange Semiconductor Index
each slid more than 6%. The slumping semiconductor sector got another kick in the teeth this afternoon after an
executive told analysts that the company doesn't expect a recovery until mid-2002. Applied dropped 9.5% to $41.95, one of the bigger drags on the Nasdaq and the SOX.
"Last week's bounce is this week's drop-off," said Peter Coolidge, managing director of trading at Brean Murray Foster Securities. "The euphoria from Microsoft that spilled into Friday is waning today."
After hitting their lowest levels since mid-April last week, the major indices staged a powerful rally. For the week, the Dow closed up 2.3% -- its first weekly gain since May. The Nasdaq gained 3.9%, and the S&P 500 finished higher by 2.1%. But some market pros were unconvinced by the strength in equities. Stocks rose at the end of the week on mediocre earnings news as investors began betting -- again -- that the worst of the earnings slowdown was over. Wall Street is now expecting a recovery sometime early next year.
That theory will be tested this week. Close to one-third of the Standard & Poor's 500 companies and half the Dow's 30 components are on the earnings calendar this week. There's also a full plate of economic data and
Federal Reserve Chairman Alan Greenspan's semiannual testimony -- formerly known as the Humphrey Hawkins testimony -- before
in the middle of the week.
Shares of electronics contract manufacturer
were suffering the acquisition blues. After the company said it planned to acquire
for about $4.5 billion in stock, Sanmina fell 10.7% to $19.76. SCI Systems gained 5.1% to $26.45. Rival
reports earnings on Wednesday.
remained on Wall Street's radar today. The stock dropped 8.6% to $42.84, hitting a 52-week-low of $40, after the
Food and Drug Administration
said Friday that it wants more data before ruling on the company's application for its new painkiller, parecoxib sodium. The company said it would supply the FDA with extra clinical data within 12 to 18 months.
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