Updated from 4:09 p.m. EST
Stocks closed lower Tuesday as the
12th consecutive rate hike and earnings trouble in the tech sector ended a two-day rally.
Dow Jones Industrial Average
fell 33.30 points, or 0.32%, to 10,406.77, and the
lost 4.25 points, or 0.35%, at 1202.76. The
, under pressure all day after a profit warning from
, slipped 6.25 points, or 0.29%, to 2114.05.
"With all the headwinds facing the economy, today was decent," said Michael Sheldon, chief market strategist with Spencer Clarke. "You can be an optimist or a pessimist here and there's plenty of evidence for both. Now we can look ahead to the continued flow of earnings reports and economic data."
About 1.76 billion shares traded on the
New York Stock Exchange
, with decliners beating advancers by a 9-to-8 margin. Trading volume on the Nasdaq was 1.94 billion shares, with decliners outpacing advancers 3 to 2.
In other markets, the yield on the benchmark 10-year Treasury remained at 4.57% after the Fed's annoucement, while the dollar rose against the yen and fell vs. the euro.
Economists widely expected the central bank to raise the official fed funds rate by another 25 basis points to 4%. The commentary on growth and risk was essentially unchanged.
The policymaking Federal Open Market Committee said in a statement that the recent "rise in energy and other costs have the potential to add to inflation pressures; however, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained."
The FOMC also repeated past wording that "with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the committee believes that policy accommodation can be removed at a pace that is likely to be measured."
Paul Mendelsohn, chief investment strategist with Windham Financial, said the Fed move was "pretty much what the market was expecting. The policy statement didn't shed any new light. I was a little surprised that they said inflation remains under control, considering the number of Fed governors expressing concern lately in speeches. The market wants to go in whatever direction based on earnings and other economic factors now that the Fed is out of the way."
"On growth, the FOMC explicitly makes the point that activity will be boosted by post-hurricane rebuilding," said Ian Shepherdson, chief economist with High Frequency Economics. "In other words, slower fourth-quarter growth won't prevent more hikes."
Oil, which finished below $60 a barrel for the first time in almost three months on Monday, closed higher, adding 9 cents to $59.85 a barrel. Gasoline futures were up a penny at $1.60 a gallon, while natural gas fell 34 cents to $11.86 per million British thermal units.
Earlier, the Institute for Supply Management said its manufacturing index for October fell slightly to 59.1 from 59.4 in October. Economists expected the index to fall to 57.0.
"The strength of this survey indicates much firmer industrial production and durable-goods numbers ahead," Shepherdson said. "Overall, it is consistent with GDP growth in excess of 4%. That will keep unemployment falling and the Fed tightening."
Separately, the Commerce Department said that U.S. construction spending rose by 0.5% in September, slightly less than economists' expectations.
On the corporate side, Dell said shortfalls in its U.S. and British operations will leave third-quarter earnings below Wall Street forecasts.
The company expects to earn 39 cents a share on $13.9 billion of sales in the quarter. Analysts had been forecasting earnings of 40 cents on $14.5 billion in sales.
Dell, whose shares were downgraded at Bear Stearns and UBS, finished down $2.64, or 8.3%, to $29.24. Fellow hardware maker
lost 0.2% to $57.50.
was lower by 3.6% to $22.65.
"The technology sector is going to be a concern throughout the day," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "For Dell to stumble after what was expected to be a good period is definitely disappointing. People were optimistic before this Dell news after the rally Friday and a good Monday."
Also warning Monday was
. The video game maker expects a profit of 53 cents to 56 cents a share in the current fiscal year, well short of the 86-cent Thomson First Call consensus. Sales will also be light.
Take-Two, which has issued two other profit warnings in recent months, blamed a delay in shipping a key title, disappointing sales and orders of other titles and worse-than-expected sales at its distribution unit. The company also lowered its estimate for the coming first quarter and next fiscal year. The stock fell by $3.12, or 15.1%, to $17.53.
After the bell Tuesday, Take-Two's rival
is expected to post fiscal second-quarter EPS of 5 cents, according to Thomson First Call.
Procter & Gamble
posted first-quarter earnings of $2.03 billion, or 77 cents a share, beating estimates by a penny. The company said strong sales helped offset an energy-cost-related decline in its gross margin. Shares were lower by 74 cents, or 1.3%, to close at $55.25.
Fellow consumer goods maker
posted third-quarter earnings that were in line with analysts estimates, according to Thomson First Call. Looking ahead, Colgate expects high-single-digit EPS growth for full-year 2005 and double-digit EPS growth in 2006. The stock finished lower, down 60 cents, or 1.1%, to $52.36.
posted a slightly narrower-than-expected loss in its third quarter and lifted its guidance for end-of-year total subscribers to above 3 million. The pay-radio company added 359,294 subscribers in the third quarter. Sirius gained 29 cents, or 4.7%, to $6.52.
said third-quarter earnings fell 24% from a year ago despite a 55% improvement in sales. Adjusted for items, the Internet company earned 32 cents a share in the quarter, beating estimates by 6 cents. Shares of IAC rose 52 cents, or 2%, to $26.12.
earned $156.7 million, or 53 cents a share, in the third quarter, up from $118.1 million, or 43 cents a share, a year ago. Excluding items, the company earned 62 cents a share in the period, 2 cents ahead of estimates. Medco slid $6.70, or 11.9%, to $49.80.
posted a third-quarter loss of 87 cents a share, much wider than the Thomson First Call consensus, after the company's operations were negatively affected by Hurricane Katrina. Hospital admissions fell by 1.4% while operating revenue was down 1.7% to $2.39 billion. Tenet lost 18 cents, or 2.1%, to $8.24.
Among companies posting on Wednesday, earnings reports are expected from
finished higher after
disclosed a 1.2% stake in the restaurant chain. McDonald's gained 17 cents, or 0.5%, to $31.77.
added 13.2% after a report in
The Wall Street Journal
and three private-equity firms are looking to purchase the company for $64 or $65 a share. The deal would be a worth a total of $12 billion. Computer Sciences rose $6.75 to $58. Lockheed Martin fell by 61 cents, or 1%, to $59.95.
Tuesday is also brought monthly auto sales from Detroit.
said sales declined by 26% in October to 199,847 vehicles. Car sales slid 11% to 67,958 units while trucks stumbled 31% to 131,889.
posted a 3% fall in October to 183,163 vehicles.
reported a 23% decline to 257,623 vehicles, with cars down 12% and truck sales lower by 30%.
Ford was down 10 cents, or 1.2%, to $8.22; General Motors lost 21 cents, or 0.8%, to $27.19; DaimlerChrysler finished down 65 cents, or 1.3%, to $49.40.
Overseas markets were mixed, with London's FTSE 100 adding 0.4% to 5338 and Germany's Xetra DAX down 0.1% to 4924. In Asia, Japan's Nikkei rose 1.9% overnight to 13,868, while Hong Kong's Hang Seng added 1.3% to 14,572. Trading in Japan was curtailed for most of the session by a computer malfunction.