Updated from 4:05 p.m. EST
Stocks ended mostly lower Thursday as investors worried about the economic outlook and a possible war with Iraq. Still, the
managed to eke out a small gain.
Dow Jones Industrial Average
ended down 56 points, or 0.7%, at 7929, while the Nasdaq finished up 0.2 point, or 0.02%, at 1301. The
fell 5 points, or 0.64%, to 838.
"Everyone seems to be sitting on the sidelines waiting for the next development," said Dave Briggs, head trader at Federated Investors.
One such development is a speech by President Bush at 4:30 EST regarding the Iraq situation. He is expected to reiterate his willingness for a second U.N. resolution authorizing military force against Iraq.
Besides worrying about a possible war, Briggs said investors were also nervous about Friday's employment report. Economists are expecting 69,000 new jobs to have been added to the payroll in January, and they project that the unemployment rate held steady at 6%.
Secretary of State Colin Powell again pressed the case for attacking Iraq Thursday as he testified before the Senate Foreign Relations Committee. On Wednesday, Powell played tape recordings and showed photographs to members of the United Nations in an attempt to prove that Iraq has been lying about its banned weapons program. In a separate development Thursday, North Korea warned of a "full-scale war" if the U.S. attacks its nuclear complex.
"Optimists hope that resolution to the uncertainty about war will prove an elixir for markets and the economy," said Morgan Stanley economist Richard Berner. "But war is not the only source
of uncertainty. Financial restraint, a weak global economy and a mini energy supply shock are all hurdles to acceleration."
Adding to the pessimistic tone in late trading were comments from
Chief Operating Officer Kevin Rollins, who said that corporate IT spending will be soft this year because of the weak economy and concerns about Iraq.
In economic news, productivity fell a seasonally adjusted 0.2% in the fourth quarter of 2002, the lowest reading since a 1.4% drop in the first quarter of 2001 and far below the 0.7% rise that economists had expected. Still, productivity rose 4.7% for the full year, the strongest showing since 1950.
In a sign that the labor market may be stabilizing, initial unemployment benefits claims fell 11,000 in the latest week to 391,000 from an upwardly revised 402,000 in the prior week. The four-week moving average, which smoothes out weekly fluctuations, declined 500 to a nine-week low of 384,750. Investors will get a clearer idea of the job picture with the release of Friday's jobs report.
A batch of retail sales did little to bolster spirits, with many coming in at the low end of expectations. Still, a few companies did raise their earnings estimates, helping the S&P retail index to climb almost 0.3%.
said January same-store sales climbed 2.3%, compared with an 8.3% rise in the same period last year. Still, the world's largest retailer said it also expects to earn $1.80 a share for the fiscal year ended Jan. 31, up from a prior target of $1.76 to $1.78 a share. Shares rose almost 0.1% to $46.79.
said same-store sales fell 3.8% for the four weeks ended Jan. 25 but it also raised expectations for the fiscal fourth quarter, saying it expects to earn at least 65 cents a share, compared with a consensus estimate of 63 cents. Shares fell almost 2% at $18.89.
U.S. stocks fell on Wednesday as Powell's speech before the U.N. Security Council failed to lift uncertainty about a war with Iraq. The Dow ended down 28 points at 7985, while the Nasdaq gave up 5 points to 1302.
The averages yo-yoed as the market changed its interpretation of Powell's address, which accused Iraq of hiding chemical weapons and obstructing U.N. inspectors. An initial blush of optimism gave way as the day progressed and members of the Security Council voiced varying levels of support for the U.S. allegations.
France, Russia and China have all said that U.N. inspectors must be given more time and have not changed that view since Powell's speech.
Overseas markets were mostly lower, with London's FTSE 100 down 2% to 3597 as investors worried that an interest rate cut by the Bank of England signaled further weakness in the economy. The BOE dropped its main interest rate 25 basis points to 3.75%. The move was unexpected and happened at about the same time the European Central Bank said it was leaving its main rate unchanged 2.75%. Germany's Xetra DAX lost 3% to 2640. In Asia, Japan's Nikkei fell 0.8% to 8484, while Hong Kong's Hang Seng fell 0.6% to 9126.
Among major earnings reports out Thursday,
said it earned $1.29 a share on a 7% jump in year-over-year revenue;
earned 20 cents a share on revenue of $65.8 million in its second quarter, both slightly better than expected, and guided higher for the third quarter; and
said it earned 17 cents a share in the fourth quarter on a 30% jump in revenue.
rose 5% to $7.23 after naming a new president and CEO Carl-Henric Svanberg. Ericsson has fallen almost 11% this week after reporting a wider than expected fourth-quarter loss and lowering its expectations for the full year.
was down another 18% to $5.04 after slashing its dividend Wednesday.
plunged 25% to $12.26 after saying it expects a larger-than-expected first quarter loss as investors delay purchases.
Volume on the
reached 1.4 billion shares, with losers beating winners by 2 to 1. On the Nasdaq, 1.2 billion shares changed hands, with declines outpacing advancers by 3 to 2.
Treasuries were firmer, with the 10-year note adding 5/32 to yield 3.98%.