Updated from 2:51 p.m. EST
Technology stocks sold off and the broader market also fell Tuesday, as continuing violence in the Middle East and an earnings warning in the software industry pushed buyers to the sidelines.
Nasdaq finished the session down 58 points, or 3.1%, at 1805 while the
Dow Jones Industrial Average lost 49 points, or 0.5%, to 10,314. The
S&P 500 lowered by 10 points, or 0.8%, to 1137.
A mixed bag of earnings estimates continued to roll in following the end of the first fiscal quarter. Late Monday night,
said it expects
first-quarter profits and licensing revenue to fall short of forecasts because of tight IT spending. Analysts at Goldman Sachs downgraded the stock to a market perform rating following the release. The software maker's shares lost 32.7% at $25.17.
The news weighed on other software makers like
, all of which were lower. Goldman also trimmed its 2003 earnings forecast on Microsoft.
Leading computer hardware manufacturers also took a hit from Goldman, as
had their estimates cut by analyst Laura Conigliaro, citing weak demand and fierce competition. All three fell.
Elsewhere on the earnings watch, consumer electronics retailer
reported an 84% increase in
fourth-quarter earnings. The Eden Prarie, Minn., company posted a profit of $350 million, or $1.62 a share, up from $190 million, or 89 cents a share, in the year-ago quarter. Analysts were expecting the company to earn $1.61 a share. The good news ended there, as Best Buy said first-quarter earnings will be 30 cents to 32 cents a share, slightly below forecasts. The stock shed 5.6% to $75.
Meanwhile, rival chain
matched analysts' estimates for the fourth quarter, pulling in 73 cents a share. Its shares closed up 5.7% at $19.15.
In the pharmaceutical sector,
took its turn at the confessional when it warned Monday that current inventory levels are too high and that reducing them will have an adverse effect on future earnings. As a result, the company's shares ended the session down 5.3% at $38.25.
One of the biggest losers on the Nasdaq was
, which dropped 37.1% to $9.01, after analysts
questioned its accounting treatment on a couple of revenue items in its 10-K filing with the
Securities and Exchange Commission
. On the Big Board, energy provider
Sierra Pacific Resources
was among the most active, trading lower by 11.5% at $8.06.
The Commerce Department said factory orders dropped 0.1% in February due to weak demand for personal computers and automobiles, compared to a revised 1.1% hike in January. Economists, on average, were predicting orders to increase by 1%.
Outside the world of business, the continuing violence in the Middle East again had investors on edge. In the latest development, Israeli military forces have turned up the heat on Yasser Arafat and his security headquarters in Ramallah, bombarding the compound with tank shells, rockets and machine gun fire. Palestinian officials said the complex is occupied by hundreds of people, including civilians, administrators, secretaries and children. The news comes just one day after a car bomb exploded in Jerusalem.
U.S. Treasury issues reversed course this afternoon, with the 10-year note trading up 18/32 to 96 13/32, yielding 5.35% at approximately 4 p.m. EST. The long bond and short-term notes were also higher.
Overseas, stocks were mixed. London's FTSE 100 lost 0.4% to end at 5251, and Germany's Xetra DAX was down 1.6% at 5311. Japan's Nikkei 225 rose 1.6% to 11,204, and Hong Kong's Hang Seng added 1.4% to close at 10,878.