(Updated from 4:07 p.m. EDT)
Wall Street was a little unsteady on its feet at the start of what promises to be a busy week.
Investors, mistrustful of last week's rally and nervous in anticipation of an action-packed roster of earnings reports this week, were shedding stocks. Market-watchers are hoping for signs that earnings will pick up steam by the end of this year, but they fear possible surprises in this week's reports.
Dow Jones Industrial Average closed down by 66.94 points, or 0.64%, to 10,472.12. The
Nasdaq Composite Index lost 55.66 points, or 2.67%, to 2029.13, and the
S&P 500 lost 13.23 points, or 1.1%, to 1202.45.
Earlier enthusiasm for banking stocks evaporated, despite strong second-quarter reports from Dow component
Bank of America
this morning. But airline and transport stocks didn't relinquish the gains they earned after
delivered solid earnings.
Meanwhile, the already-slumping semiconductor sector got another kick in the teeth when the CFO of
said sales weren't rebounding (yet) to the crowd of industry types at the big Semicon West meeting in San Francisco. Shares of Applied Materials dropped 9.5% to $41.95; and the company was one of the bigger drags on the Comp and a heavy weight on the
Philadelphia Stock Exchange Semiconductor Index
, which lost 6% today.
Citigroup and Bank of America both beat earnings estimates, despite deteriorating loan quality and sluggishness in the investment-banking business. Investors couldn't help but reward them for it. Citigroup posted second-quarter earnings of 74 cents a share, beating analysts' estimates by a penny. The bank said its international consumer operation buoyed profits. Bank of America also beat Wall Street's estimates, with earnings of $1.24 a share. Analysts were expecting $1.18. Citigroup was up 0.6% to $49.15 and Bank of America rose 1.9% to $61.38. The
Philadelphia Stock Exchange/KBW Bank Index
Bank of New York
was down 12% to $43.50, however, despite reporting that its second-quarter earnings rose 8% from the year-ago period to 52 cents a share. Excluding amortization, goodwill and intangibles, the company posted income of 54 cents a share. Analysts were expecting earnings of 53 cents, according to Thomson Financial/First Call.
Despite the ailing business travel market, Continental's earnings came in above expectations. The airline reported earnings of 74 cents a share, compared with estimates for 58 cents -- its stock was lately rising 2.2% to $52.12. Investors also were rewarding airline and transportation stocks.
The American Stock Exchange Airline Index
was up 0.4%. The
Dow Jones Transportation Average
was rising 0.5%.
But most other sectors were drifting lower. "Last week's bounce is this week's drop-off," said Peter Coolidge, managing director of trading at Brean Murray Foster Securities. "The euphoria from Microsoft that spilled into Friday is waning today. We're waiting on one of the big bellwethers." But Coolidge doesn't expect major losses today. "We won't see too much selling pressure, because then buyers would step in again."
Last week, after hitting their lowest levels since mid-April, the major indices staged a powerful rally. For the week, the Dow closed up 2.3% -- its first weekly gain since May. The Nasdaq gained 3.9%, and the S&P 500 finished higher by 2.1%. But some market pros were unconvinced by the strength in equities. Stocks rose at the end of the week on mediocre earnings news as investors began betting -- again -- that the worst of the earnings slowdown was over. Wall Street is now expecting a recovery sometime early next year.
That theory will be tested this week, as plenty of heavy-hitters are scheduled to report. Close to one-third of the Standard & Poor's 500 companies and half the Dow's 30 components are on the earnings calendar this week. There's also a full plate of economic data and
Federal Reserve Chairman Alan Greenspan's semiannual testimony before
in the middle of the week.
A couple of downbeat notes on the battered tech sector this morning weren't helping the tech sector any. Wit Soundview dropped its performance estimates for
. Additionally, Morgan Stanley Dean Witter lowered its forecast on Cisco for the fourth quarter and 2002, saying it believes the company could see quarter-over-quarter revenue declines of 3% to 14%. Cisco was lately falling 5.1% to $17.77. Dell was off 3% to $27.11, and Compaq was up 0.5% to $15.29.
Shares of contract electronics manufacturer
were suffering the acquisition blues. After the company said it plans to acquire
for about $4.5 billion in stock, Sanmina was falling 10.8% to $19.75. SCI Systems was up 4.9% to $26.40.
remains on Wall Street's radar today. The stock was off 8.4% to $42.91 this morning after the
Food and Drug Administration
said Friday that it wants more data before ruling on the company's application for its new painkiller, parecoxib sodium. The company said it would supply the FDA with extra clinical data within 12 to 18 months.
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