Updated from 4:11 p.m. EDT
A disappointing outlook from
set a downbeat tone early Tuesday, and the major indices, under pressure throughout the session, closed with losses.
Dow Jones Industrial Average
fell 79.09 points, or 0.8%, to 9507.20. The
dropped 8.47 points, or 0.8%, at 1023.17, while the
was lower by 15.19 points, or 0.8%, to 1873.43.
"The market has had quite a run, so it's normal to see a pullback. What is worrisome is that, sooner or later, I expect we'll get a massive pullback," said Jim Melcher, market strategist at Balestra Capital.
Almost 1.4 billion shares changed hands at the
New York Stock Exchange
and 2.2 billion shares traded on the Nasdaq. Decliners were ahead of advancers by a 3-to-2 margin.
Nokia said solid demand for cell phones will help the company meet or beat its initial profit expectations. However, the world's largest handset maker also reiterated that sales will be flat to lower in the third quarter. After rising Monday, shares lost $1.09, or 6.4%, to $15.98.
On a sector basis, there was weakness in retail, with the home-improvement area losing 4.1%. The Philadelphia Semiconductor Index was down 1.3%, while the Nasdaq Biotech Index was up 0.9%.
The retail arena was dragged lower by
after the stock was downgraded at Goldman Sachs to in-line from outperform on concerns about higher mortgage rates, which could curb spending on home-improvement items. Shares slipped $1.60, or 4.7%, to $32.15.
Goldman also reduced its rating on
, but upgraded
to outperform from in-line.
Losses were also prevalent among telecom-equipment stocks after
, the third-largest U.S. local-phone carrier, reduced its forecast for capital spending in 2003 to about 13% to 14% of revenue, from 15% previously.
Makers of telecom equipment such as
were down on the news, while BellSouth fell 53 cents, or 2.1%, to $25.36.
rose 24 cents, or 1%, to $23.59. The world's largest fast-food chain said August sales rose 3.8%, the fourth consecutive monthly rise. Same-store sales in the U.S. climbed 8.8%.
Following the news, Lehman Brothers raised its price target on the stock to $27 from $26, while CIBC, Bank of America, SG Cowen, Wachovia and Bear Stearns boosted their third-quarter profit estimate for the company. J.P. Morgan, however, said it continues to rate the stock underweight.
Also out with encouraging news was BlackBerry maker
Research In Motion
, which said second-quarter earnings will beat forecasts. Shares advanced $6.31, or 22.3%, to $34.55.
lost 71 cents, or 2.7%, to $25.32 ahead of a conference call after the closing bell Tuesday. The stock had moved up earlier on hopes the company might raise its guidance.
Analysts were again active Tuesday, with a few upgrades to key technology companies.
gained 8 cents, or 0.7%, to $11.20 after UBS upgraded the stock to buy from neutral, citing confidence in the company's product cycle.
saw Deutsche Securities raise its rating on the stock to buy from hold. The firm also raised its full-year 2004 estimates on Cisco. Shares of Cisco fell 8 cents, or 0.4%, to $20.78 after having spent most of the session with gains.
rose on an upgrade from Wachovia to outperform from market perform. Analysts cited confidence in new CEO Kevin Kennedy, as well as improving demand. Shares climbed 19 cents, or 4.7%, to $4.20.
As for the day's economic data, wholesale inventories for July were unchanged following a flat reading the previous month. Economists had expected a 0.1% rise. Inventories haven't increased since March as companies continue to curb production amid uncertain demand.
"The fact that inventories are falling now is one of the biggest reasons we are confident that GDP will remain in the neighborhood of 4% into the fourth quarter. There's pent-up demand building," Chris Low, chief economist at FTN Financial, wrote in a research note.
The Commerce Department also said sales at U.S. wholesalers rose 0.4% in July after a revised increase of 1.6% the previous month.
The 10-year note was gaining 19/32 to 99 6/32, with the yield falling to 4.35%. The dollar was little changed vs. the euro and the yen.
The news from Nokia had a negative effect on European trading, with London's FTSE 100 down 0.7% to 4263 and Germany's Xetra DAX falling 1.3% to 3594. In Asia, Japan's Nikkei closed 0.3% higher at 10,683, while Hong Kong's Hang Seng slipped 0.1% to 11,165.
On Monday, the Dow rose 82.95 points, or 0.9%, to 9586.29. The S&P 500 added 10.25 points, or 1%, to 1031.64, while the Nasdaq gained 30.38 points, or 1.6%, to 1888.62. The Nasdaq closed at the highest level in 18 months, while the Dow and S&P ended near 15-month peaks.