Updated from 4:06 p.m. EST
Stocks slipped and fell Tuesday with the tech sector hurt the most, as reduced guidance from
and near-record oil prices discouraged investors from extending the recent rally.
Dow Jones Industrial Average
fell 24.24 points, or 0.2%, to 10,912.62, having touched a new 45-month high earlier in the session; the
slipped 5.88 points, or 0.5%, to 1219.43, after having closed Monday at its highest level in almost four years; while the
slid 16.66 points, or 0.8%, to 2073.55, after a 1% gain yesterday, with the bulk of the losses coming near the close.
"When you get close to 3 p.m. and you're selling, you pick up your intensity as it's finishing up," said Brian Williamson, equity trader with Boston Company Asset Management. "On a mildly slow day with no economic news, people unload at the end. Then you get the accelerating of selling late, pushing it to the bell. Everything else appears reasonable at the finish today; it's just an acceleration to the downside. The market was off on the TI news today and has finally found a level appropriate with the news overnight and this morning."
Volume on the
New York Stock Exchange
was 1.52 billion shares, with decliners beating advancers by a ratio of 2 to 1. Volume on the Nasdaq was 1.70 billion shares, with decliners outpacing advancers by the same ratio.
In other markets, the 10-year Treasury note was recently down 19/32 to yield 4.38%, near its recent high, while the dollar was lower against the yen and euro. Oil rose to its record high of last October; the April contract was up 70 cents to close at $54.59 a barrel, having briefly topped $55 a barrel as traders focused on OPEC's upcoming meeting.
In a speech delivered to the Executives Club of Chicago,
Governor Ben Bernake said that the Fed is likely to continue its measured pace of rate hikes.
"Economic activity appears to be off to a solid start in 2005," said Bernake. "The data surprises in recent months have tended toward the upside, and real GDP growth in the vicinity of 3.75 to 4% looks attainable this year despite the ongoing reduction in monetary and fiscal stimulus. In stark contrast to the situation of a couple of years ago, both business investment and hiring should support growth in 2005."
"The inflation forecast presents its own challenges," added Bernake. "My own guess is that core PCE inflation in 2005 will be slightly higher than its 2004 rate of 1.6%, though likely remaining within what I think of as the 'comfort zone' of 1 to 2%." (Bernake was referring to the personal consumption expenditure index in the government's consumer spending report.)
Questions about rates and oil aside, two of the three major indices remain close to their multiyear highs of the past two sessions.
"This isn't a spring chicken market, but instead a 29-month long bull market," said Al Goldman, chief market strategist with A.G. Edwards. "After a short-term extension and with oil up near $55, it says a lot of the underlying strength of this market that the Dow is hanging in there."
Texas Instruments fell 3.8% after lowering the top end of its earnings and revenue guidance for the first quarter, citing lackluster sales of chips for digital televisions. The semiconductor maker, which surged to an 11-month high in yesterday's technology rally, sees first-quarter earnings of 22 cents to 24 cents a share, down from its previous range of 22 cents to 26 cents a share. Shares were down $1.03 to finish at $26.34.
"We're back to where we were for most of last week, indicating that Friday's rally was a short one," said Peter Boockvar, equity strategist with Miller Tabak & Co. Boockvar said the Texas Instruments warning "indicates it's not clear sailing. The news isn't bad, but it's still a miss, and now people want to re-evaluate."
Other chip stocks will be in focus later this week, with
giving its midquarter update. The chipmaker also received a warning Tuesday from Japanese antitrust regulators, who ruled that the company was curbing competition by pressuring clients to buy its chips. Also,
will report quarterly earnings Thursday. Intel was down 31 cents, or 1.2%, to close at $24.80, while National Semiconductor lost 28 cents, or 1.4%, to $20. The Philadelphia Semiconductor Sector index fell 1.4% on both of the components' decline.
One of the catalysts of Monday's rally,
, was back in the news Tuesday, raising its quarterly dividend to 9 cents from 7 cents and setting a $2 billion stock buyback. Also, the company named Paul Jacobs as chief executive officer, succeeding his father, Irwin Jacobs, who will remain chairman of the company. The stock finished down $1.10, or 2.9%, to $36.29, despite tweaking its earnings guidance on Monday.
fell Tuesday following the homebuilder's comments that bad weather delayed some closings in the first quarter, hurting earnings. The company, part of a sector that has seen intermittent and powerful rallies for much of the past two years, expects earnings of $1.18 a share in the quarter, about 12 cents below forecasts. Ryland was down $4.27, or 6%, to end at $67.54. Rival
traded down $1.06, or 1.3%, at $77.99.
was lower after its board said the company isn't for sale. Directors of the embattled electronics chain said in a statement that the buyout offer proposed last month by Boston hedge fund Highfields Capital isn't in the best interests of shareholders. The $3.24 billion bid valued Circuit City shares at $17 apiece. Shares were off 45 cents, or 2.8%, to $15.80.
said fourth-quarter net income rose to $14.1 million, or 52 cents a share, from $11.9 million, or 49 cents a share, a year ago. Revenue increased to $117.4 million from $75.3 million. Analysts expected quarterly earnings of 22 cents a share, according to Thomson First Call. The pharmaceutical company also increased its 2005 annual revenue projections to a range of $460 million to $475 million, from $430 million to $450 million. Ventiv also raised its 2005 earnings expectations to between $1.03 and $1.09 a share, from between 98 cents and $1.04. Shares gained $1.60, or 6.6%, to $25.93.
said the experimental drug Entereg, which it developed with Adolor, helped lower opioid-induced bowel dysfunction in phase II tests. Brokerage Brean Murray upgraded shares of Adolor to hold from sell on the news. Adolor rose $1.43, or 16.2%, to $10.25.
reported a fourth-quarter net loss of $675.9 million, or 93 cents a share, compared with a loss of $337.4 million, or 45 cents a share, a year ago. The wider loss was attributed to an impairment charge from a writedown. Kroger fell 87 cents, or 4.9%, to $16.85.
reported a fourth-quarter loss of $2.02 billion, or $4.33 a share, which included a $1.2 billion pretax asset writedown, a $480 million allowance for its deferred tax assets, and losses from discontinued operations of $420 million. Excluding the items, Tenet lost 6 cents a share, compared with Wall Street's 9-cent estimate. Revenue also fell 2% to $2.41 billion, matching the analyst consensus. Shares added 10 cents, or 0.9%, to $11.13.
boosted its earnings guidance for the March quarter by 3 cents a share while also raising its dividend to 8 cents. The hard-drive maker expects revenue of $1.87 billion with a gross margin of at least 23%, in line with Wall Street's expectations. Seagate also said in its midquarter update that it expects earnings of 36 cents a share, greater than the Thomson First Call projection of 33 cents a share, before items. Seagate rose 32 cents, or 1.7%, to $19.15.
In brokerage action, UBS upgraded both
to neutral and buy, respectively. The brokerage also raised Yahoo!'s price target to $41 from $38 and upped Google's stock price target to $190 from $160, citing growth in the company's web sites and slower-than-expected increases in expenses. Yahoo! gained 7 cents, or 0.2%, to $33.16, while Google lost $3.61, or 1.9%, to $185.20.
Smith Barney upgraded shares of
to hold from sell, citing its agreement to be acquired by
. The brokerage also raised its share-price target on Hibernia to $33 from $25. On Monday, Capital One said it would acquire Hibernia for cash and stock worth about $5.35 billion. Hibernia gained 60 cents, or 1.9%, to $32.84.
Overseas markets finished mostly lower, with London's FTSE 100 off 0.3% to 5010 and Germany's Xetra DAX falling 0.7% to 4396. In Asia, Japan's Nikkei fell 0.3% overnight to 11,887, while Hong Kong's Hang Seng added 0.8% to 13,882.