Nokia Warning Takes Down Tech Stocks

But blue-chips climbed to a small gain after the cell phone provider took the market lower.
Publish date:

Updated from 4:08 p.m. EST

Blue-chip stocks recovered early losses and salvaged a small gain, while the


led the way down after disappointing earnings forecasts made investors apprehensive about the market's recent gains.


Dow Jones Industrial Average

closed up 12.44 points, or 0.12%, to 10,570.81; the

S&P 500

shed 2.40 points, or 0.21%, to 1148.17; and the Nasdaq was down 19.22 points, or 0.92%%, to 2059.90. Semiconductors weighed heavily on the session, with the Philadelphia Semiconductor Index losing over 2%.

The Dow gained traction in the midafternoon, shortly after St. Louis Fed President William Poole told an audience at the University of Arkansas-Little Rock that the Federal Open Market Committee's "commitment to price stability is not in doubt."


(AA) - Get Report

led the index ahead of its first-quarter earnings announcement. Its shares closed up 61 cents, or 1.7%, to $36.50. After the bell, the aluminum maker said it earned income from continuing operations of $350 million, or 40 cents a share, a penny below analysts' expectations.

But a discouraging premarket forecast from


(NOK) - Get Report

set the tone for the day. Its stock plunged 18.9% after the cell-phone maker cut its first-quarter sales guidance on Tuesday, saying earnings would be at the low end of expectations. Shares lost $3.94 to $17.21.

Nokia's warning took a toll on its suppliers.

Texas Instruments

(TXN) - Get Report

lost $1.86, or 6%, to $29.08, and


(STM) - Get Report

was down $1.12, or 4.5%, to $23.63.

"The Nokia news was bad for tech and telecom, which brought down the Nasdaq," said Arthur Hogan, chief market analyst at Jefferies. "Today was just sort of the whiff for the week, but we've got some big earnings news coming out this week, and I think we'll be able to put it behind us."

Matt Kelmon, president and portfolio manager at Kelmoore Strategy Funds, was unfazed by the news. He said a lack of first-quarter earnings preannouncements tells him that most reports will be as good as last quarter or better than expected.

"I think earnings are going to be excellent this month for the most part," Kelmon said. "The market has found a new range. We saw a low end of the range at the end of March, and we'll probably see the high point sometime in April, which I think might be the best month of the year for stocks."

"I'm watching equity flows," he added. "We saw a pause in February and the market pulled back subsequently. Now, I think April will bring a huge rush of money flow into equity funds and that will push the markets higher."

On Monday, the Dow closed above the 10,500-level for the first time since March 8, three days before terrorist bombings in Spain brought geopolitical fears back to the fore and sent the stock market to its 2004 lows. The new plateau could be a resistance level for blue-chips, as traders place their bets on earnings and try to gauge whether the long-awaited correction has its low in place. The index is still more than 1.5% below its highest close of the year of 10,737.70 on Feb. 11.

Meanwhile, the tech-heavy Nasdaq, now settled above the 2000 mark that eluded it for more than three weeks in March, is more than 4% off its high for the year of 2153.83, set on Jan. 26.

In other markets, the 10-year note was up 13/32 to yield 4.16% after a two-day selloff, the dollar was higher against the yen and lower against the euro, while gold and oil prices climbed.

In overseas markets, London's FTSE closed down 0.2% to 4473 and Germany's Xetra DAX was down 0.6% to 4023. In Asia, Japan's Nikkei closed at a 32-month high with a 1% gain to 12,079, and Hong Kong's Hang Seng picked up 1.2% to 12,886.

In corporate news,



tumbled 24.9% after it warned late Monday of lackluster first-quarter earnings, saying it expects a loss of 7 cents a share on revenue of $20 million. Its shares fell $1.98 to $5.97.

Bank of America

(BAC) - Get Report

said it is cutting 12,500 jobs, or 6.6% of its workforce, after the recent completion of its acquisition of


. Its shares gained 75 cents, or 0.9%, to $82.



gained 13.1% after it said second-quarter earnings would exceed earlier estimates on strength across all its major business segments and regions. The telecommunications-equipment maker said profits would exceed earlier estimates on strength across all its major business segments and regions, totaling $440 million to $450 million, up from a previous estimate of $350 million to $380 million. Its shares closed up $2.39 to $20.58.


(K) - Get Report

late Monday raised its guidance for full-year earnings to a range of $2.07 to $2.11 a share, from a range of $2.05 to $2.09. Its shares closed up 84 cents, or 2.1%, to $40.34.

Boston Scientific

(BSX) - Get Report

shares rose after the company said late Monday that its Taxus drug-coated stent has exceeded early sales targets, recording sales of $98 million between March 8 and March 31. Its shares lost 36 cents, or 0.8%, to $45.45.



said its first-quarter earnings would not meet Wall Street's expectations and lowered its outlook for the year to account for the March 15 closure of its merger with Rainbow Technologies. Safenet shares closed down $6.80, or 17.7%, to $31.65.

On Wednesday, the government will report changes in import and export prices during March at 8:30 a.m. EST. In February, exports rose 0.6% while imports were up 0.4%.

Earnings releases are scheduled before the opening bell from



, expected to report first-quarter earnings of 11 cents a share, up from last year's 8 cents a share;



, expected to report first-quarter earnings of 31 cents a share, down from 35 cents a share; and

Constellation Brands

(STZ) - Get Report

, expected to report fourth-quarter earnings of 54 cents a share, down from last year's 56 cents a share.