Now that the sport of watching earnings is mostly done for the season, investors have moved on to the next game, guessing what the Fed will do in two weeks. Still, the market takes time out every now and then to drop a stiff penalty on some company that falls short of expectations, or has a less-than-stellar outlook.
Most stocks went along for the ride south as punishments were meted out to business management software company
and retailing giant
. Novell was shedding 38.1% after
yesterday's postclose warning that second-quarter income would be about half of Wall Street's expectations.
Wal-Mart's woes were the result of
bearish comments on the retailing sector. Fellow sellers were feeling the pain with the
S&P Retail Index
lately down 5.7%. Goldman tossed Wal-Mart and
, among many others, off its recommended list and slapped market performer ratings on the stocks. Target was lately tumbling 7.1%.
That bad news, combined with an unhealthy dose of Fed fear, made for a second down day in the broader market. "They don't appear to like stocks today," said Doug Myers, vice president of equity trading at
in Atlanta. "Some of it is interest-rate fears. Some of it is another round of people who have some profit in their stock. The market is stair-stepping down, so they try to lock in their profits."
Dow Jones Industrial Average
spent the morning in the red, lately off 208, or 1.9%, to 10,524, while the
Nasdaq Composite Index
surrendered after a brief attempt to move higher and lately was down 110, or 2.9%, to 3676. The
was down 28, or 2%, to 1418, while the small-cap
was off 12, or 2.4%, to 493. Internet stocks were heading modestly lower after a short stop in the green with
TheStreet.com Internet Sector
index down 2, or 0.2%, to 869.
"Everyone keeps eyeballing that
Federal Open Market Committee meeting" coming up May 16, said Adam Wagner, president of
Wagner Hermann & Herbst
in Houston, adding that there is enough time before the meeting that we may even see a rally. Right now the market has gone from pricing in a 25-basis-point rate hike to something approaching 50 basis points, said Wagner. "What that would mean is that we'd probably get a knee-jerk reaction either way," he said. If the move is 50 and the market heads down, he added, a lot of the duration of the drop will depend on what kind of guidance the Fed issues. A quarter-point hike could mean a relief rally.
Still, Wagner said he feels there has been enough air taken out of the market in recent weeks, that Fed Chairman
Alan Greenspan has less of a reason to think a 50-basis-point lift is needed. Though numbers for April have not been released yet, Wagner guesses that margin debt, in which Greenspan is known to be keenly interested, has waned as a result of all the investors who had to meet margin calls last month when the market took a nosedive. In addition, "the stocks that were the most over-exposed corrected the most," he said.
For now, today's action is "not a storm, it's a stream," said Myers. "You have some people with long-term gains and short-term losses and it's making them skittish."
Myers noted that health-care stocks were also hurting after
fell well short of expectations with its first-quarter earnings report. The company said rising employment costs and patient liability claims had cut into its profits. Manor Care lately was down 35.6%. The
S&P Health Care Index
was off 0.6%.
Financials had been inching higher earlier on but lately dipped into the red.
were all down. The
Philadelphia Stock Exchange/KBW Bank Index
was down 0.6% while the
American Stock Exchange Broker/Dealer Index
was off 1.3%
In the bond market the 10-year Treasury was down 6/32 to 101 6/32, its yield rising to 6.33%.
Breadth was negative, particularly on the Big Board, on moderate volume.
New York Stock Exchange:
808 advancers, 1,942 decliners, 539 million shares. 33 new 52-week highs, 44 new lows.
Nasdaq Stock Market:
1,066 advancers, 2,686 decliners, 794 million shares. 8 new highs, 61 new lows.
For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.