Stocks Yield to Rate Worries

Big numbers from DuPont, AT&T and Lockheed aren't enough to keep buyers around.
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Updated from 4:05 p.m. EDT

Stocks closed lower Tuesday as stronger-than-expected home sales data sent bond yields soaring and kept traders from focusing on a spate of upbeat corporate earnings reports.

The

Dow Jones Industrial Average

lost 53.07 points, or 0.5%, to 11,283.25, and the

S&P 500

fell 6.37 points, or 0.5%, to 1301.74. The

Nasdaq Composite

dropped 3.08 points, or 0.1%, to 2330.30.

The 10-year Treasury bond plunged 23/32 in price, pushing the yield up to 5.08%. Meanwhile, the dollar firmed against the euro and the yen.

The broad averages weakened after the National Association of Realtors said existing-home sales unexpectedly rose by 0.3% in March to an annualized rate of 6.92 million. Economists had forecast that sales would decline to 6.7 million annualized units.

Though the economic data were stronger than expected, Peter Cardillo, chief market analyst with SW Bach & Co., pointed out that the National Association of Realtors did report an increase in inventories of existing homes, which may foreshadow a slowdown.

Another surprise came from the Conference Board, whose consumer confidence index rose to 109.6 for April from a revised 107.5 in March. The index had been expected to decline to 106.3 amid higher gas and oil prices.

Worries about how far the

Federal Reserve

will lift rates has had traders on edge for some time. The U.S. central bank has taken short-term rates to 4.75%, from a four-decade low of 1%, by hiking the fed funds target at 15 consecutive meetings.

The market expects at least one more increase, to 5%, when the Fed meets next month, but many participants are hoping policymakers will pause after that. Strong economic data make it more likely the Fed will be inclined to continue tightening.

"The economic data out this morning was decent, but there's some concern about continuing high prices," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Oil may be pulling back, but oil stocks are still pulling the market down. It hasn't gotten overdone, but we've still got profit-taking today. We don't have any catalysts yet so we'll ride this out."

Oil eased after President Bush announced a plan to temporarily cease deposits into the U.S. Strategic Petroleum Reserve in an attempt the curb rising gasoline prices. After falling nearly $2 on Monday, June crude ended down 45 cents at $72.88 a barrel. Gasoline closed down 4 cents to $2.13 a gallon and natural gas was lower by 31 cents to $7.25 per million British thermal units.

To view Gregg Greenberg's video take on today's market, click here

.

Precious metals were trading higher again Tuesday. Gold rose, adding $10.30 to $634.20 an ounce, and silver was up 79 cents to $12.68 an ounce.

By sector, the Philadelphia Oil Service Sector index was down 1%, the Amex Oil index lost 1.3%, and the Amex Natural Gas index was off 1%. The Philadelphia Housing Sector index fell by 1.3%, while the Amex Gold Bugs index was up 0.5%.

Another torrent of earnings news was on the docket, with quarterly updates after the close from

Amazon.com

(AMZN) - Get Report

,

Boyd Gaming

(BYD) - Get Report

and

Ingram Micro

(IM)

.

A slew of companies reported before the opening bell. Among them was

DuPont

(DD) - Get Report

, which said it had first-quarter earnings of $817 million, or 88 cents a share, down 15% from a year ago. Excluding items, the industrial company earned 93 cents a share, easily topping the Thomson First Call consensus of 80 cents a share. Net sales dipped to $7.39 billion, below analysts' estimates of $7.69 billion.

DuPont also raised its earnings outlook for 2006 to earnings of $2.80 per share. However, the stock was lower by 58 cents, or 1.3%, to $43.96.

Lucent

(LU)

posted fiscal second-quarter earnings of $181 million, or 4 cents a share, down 32% from last year. Revenue fell to $2.14 billion from $2.34 billion a year ago. The Thomson First Call average estimate was for EPS of 3 cents on revenue of $2.24 billion. Lucent shares were off 4 cents, or 1.4%, to $2.93.

The

Chicago Merc

(CME) - Get Report

posted first-quarter earnings of $2.61 a share, missing estimates by 2 cents. At $263.4 million, revenue was up 23% from a year ago but about $1.5 million shy of forecasts. Shares fell $18.25, or 3.7%, to $475.25.

AT&T

(T) - Get Report

posted first-quarter earnings of $1.44 billion, or 37 cents a share, up 63% from a year ago. Excluding items related to the merger with SBC Communications as well as Cingular, AT&T earned $2 billion, or 52 cents a share, beating the Thomson First Call consensus by 3 cents. The stock gained 7 cents, or 0.3%, to $25.60.

Lockheed Martin

(LMT) - Get Report

said it had first-quarter net income of $591 million, or $1.34 a share, up 60% from last year, thanks to a 9% rise in sales to $9.21 billion. Analysts expected the company to earn $1.14 a share on sales of $9.03 billion. The company also raised its full-year 2006 outlook. Lockheed Martin declined $1.39, or 1.8%, to $76.20.

Whirlpool's

(WHR) - Get Report

first-quarter earnings rose 37% from a year ago to $118 million, or $1.70 a share, wiping out the Thomson First Call estimate of $1.50 a share. Sales rose 10% to $3.5 billion, also trouncing forecasts. Whirlpool added $2.14, or 2.4%, to $92.64.

BP

(BP) - Get Report

said first-quarter earnings fell 15% from a year ago, reflecting refinery shutdowns and a higher tax bill. The oil supermajor earned $5.6 billion, down from $6.6 billion, although sales rose 23% to $67.1 billion. The stock lost 94 cents, or 1.2%, to $74.88.

JetBlue

(JBLU) - Get Report

said it swung to a first-quarter loss of $32 million, or 18 cents a share, compared with earnings of $6 million, or 4 cents a share, a year ago. Revenue climbed 31% to $490 million. The Thomson First Call average estimate was for a loss of 20 cents a share on revenue of $497.9 million.

The airline set a cost-alignment initiative that includes deferring 12 aircraft deliveries and said it will sell between two and five of its jets. JetBlue shares surged $1.24, or 13.2%, to $10.64.

E.W. Scripps

(SSP) - Get Report

posted first-quarter net income of $75.1 million, or 45 cents a share, up from $70 million, or 42 cents a share, a year ago. Income from continuing operations rose to $81.5 million, or 49 cents a share, from $72.9 million, or 44 cents a share, a year ago. Consolidated revenue from continuing operations jumped 22% to $590 million. The Thomson First Call consensus was for a profit of 40 cents a share on revenue of $686.2 million. Shares tacked on 69 cents, or 1.6%, to $45.25.

Late Monday,

Netflix

(NFLX) - Get Report

posted first-quarter profit of $4.4 million, or 7 cents a share, and said sales jumped 47% from a year ago to $224.1 million. Both numbers beat estimates, and the stock gained 1.4% to $31.68.

Away from earnings,

Sun Microsystems

(SUNW) - Get Report

made headlines with news that Scott McNealy, the company's co-founder and one of the highest-profile tech managers in the country, will step down. Jonathan Schwartz, Sun's president, will take over the top job.

Sun also reported first-quarter results Monday, saying its third-quarter loss widened to $217 million, or 6 cents a share, from $28 million, or 1 cent a share, a year ago. The loss matched estimates. On the top line, Sun's sales jumped 21% from a year ago, missing the Thomson First Call consensus estimate of $3.21 billion. Shares were up 1 cent to $4.99.

Piper Jaffray upgraded

Yum! Brands

(YUM) - Get Report

to outperform from peer perform, citing strong first-quarter results. Late Monday, the company posted earnings of $170 million, or 59 cents a share, up 11% from last year and ahead of the Thomson First Call consensus by 2 cents.

The operator of KFC, Taco Bell and Pizza Hut also raised its full-year profit target to at least $2.81 a share, up from $2.54 and now in-line with analysts' targets. Yum! was up $1.74, or 3.5%, to $51.34.

Overseas markets were mixed, with London's FTSE 100 down 0.2% to 6087 and Germany's Xetra DAX unchanged at 6079. In Asia, Japan's Nikkei rose 0.3% overnight to 16,970, while Hong Kong's Hang Seng lost 0.8% to 16,578.