Updated from 4:06 p.m. ESTTech shares tumbled Monday, dragged down by another gloomy forecast in the semiconductor space, while blue chips failed to hold an early gain and closed lower for the fourth straight session. The Dow Jones Industrial Average fell 24.38 points, or 0.23%, to 10,368.61, erasing all of a 50-point gain; the S&P 500 lost 4.12 points, or 0.35% to 1163.75; and the Nasdaq slumped 25.57 points, or 1.26%, to 2008.70, its lowest close since Nov. 3. The 10-year Treasury note was up 4/32 in price to yield 4.12%, while the dollar was lower against the yen and euro. Volume on the New York Stock Exchange was 1.49 billion shares, with decliners beating advancers by a ratio of about 3 to 2. Volume on the Nasdaq was 2.13 billion shares, with decliners outpacing advancers 11 to 5. The losses among technology stocks followed an earnings and sales warning from German chipmaker Infineon ( IFX), which reported slowing demand and continued inventory overhang among customers. The Philadelphia Stock Exchange Semiconductor Index lost 1.7%, while the Semiconductor HOLDRs Trust ( SMH) was also down 1.7%. "We have seen a slowdown in most of our application segments, a further clear market weakening and lower customer demand during the first quarter," Infineon said. The company, which generates more than $2 billion a quarter in sales, saw its shares decline 37 cents, or 4%, to $8.97. Oil was volatile amid a bitter cold wave that continued to grip the Northeast and a power outage that slowed exports from southern Iraq. In Nymex floor trading, the March crude contract closed up 28 cents to $48.81. "What we're seeing is a buyer's strike, just as we've seen this year so far," said Edgar Peters, chief investment officer with Pan Agora. "People are not assuming long positions, and we're not entirely sure why. People are clearly waiting for something, some type of good news. All the fundamentals are in the right place, but people are just not willing to take a chance." Stocks entered the heart of the fourth-quarter earnings season having fallen for three straight weeks, the first time that's happened at the start of a year since 1982. Last week, the Dow Jones Industrial Average fell 165 points, or 1.6%, to 10,392. It has now erased all of the gains of 2004's fourth quarter. The S&P 500 fell 16 points, or 1.4%, to 1167, while the Nasdaq Composite gave up 53 points, or 2.6%, to 2034, a new 10-week low.
"We're still looking at the first three weeks without a clear understanding," said Arthur Hogan, chief market analyst with Jefferies. "We're supposed to have an oversold scenario, but we're not seeing money flow in." Wal-Mart said January sales were running consistent with its previous forecast for a same-store increase between 2% and 4%. The company cited strong sales of food but noted that with the Super Bowl coming a week later this yeaer, January won't benefit from a big, pregame sales surge. Wal-Mart shares were up by 6 cents, or 0.1%, to $53.07. American Express ( AXP) reported fourth-quarter earnings of $896 million, or 71 cents a share, up from $763 million, or 60 cents a share, a 17% increase. Revenue gained 10% to $7.77 billion. Analysts expected the company to earn 70 cents a share on revenue of $7.49 billion. American Express rose 67 cents, or 1.3%, to $52.60. Kimberly-Clark ( KMB) reported fourth-quarter earnings Monday of 91 cents a share, beating the Thomson First Call consensus of 90 cents a share. Kimberly-Clark said profit was $445.3 million, compared with $459.5 million from a year ago. Shares finished up 62 cents, or 0.9%, to $64.40. Travelzoo ( TZOO) shares skidded after the company announced an SEC inquiry into employee stock trades. The shares, which rose by 11 times last year, plummeted $18.05, or 24.6%, to $55.33. According to Travelzoo, the SEC probe focuses on transactions in its stock carried out by employees including founder Ralph Bartel. In a conference call, the company denied any wrongdoing and said the probe was a predictable result of its huge rally last year. Eaton ( ETN) said quarterly income rose to $183 million, or $1.16 a share, from $114 million, or 72 cents a share, a year ago. Sales increased 26% from a year earlier to $2.6 billion. The Thomson First Call estimate was $1.13 a share on sales of $2.54 billion. Eaton dipped 60 cents, or 0.9%, to $64.80. Station Casinos ( STN) said it swung to a fourth-quarter profit of $38 million, or 55 cents a share. Excluding items, the casino operator earned 58 cents a share, beating estimates by 7 cents. Revenue rose 15% from a year ago to $264.7 million. Shares added $2.26, or 4%, to $58.85.
Lexmark ( LXK) said it earned $155 million, or $1.18 cents a share, for the fourth quarter, up from $138.8 million, or $1.05 a share, from a year ago. The company posted revenue of $1.54 billion, a 13% increase. The company's results beat the Thomson First Call consensus of $1.14 a share on revenue of $1.47 billion. Lexmark rose $1.11, or 1.3%, to $85.02. Pilgrim's Pride ( PPC) earned $48.5 million, or 73 cents a share, in its first quarter, compared with $10.3 million, or 20 cents a share, last year. The results beat estimates by 2 cents a share. Revenue rose 31% from a year ago to $1.37 billion. Pilgrim's Pride lost $1.41, or 4.1%, to $32.75. Monday kicked off the biggest week of the current earnings cycle, with results from Silicon Technologies ( SLAB) and Netflix ( NFLX) arriving after the closing bell. Companies releasing earnings later this week include Merrill Lynch ( MER), Nokia ( NOK), JetBlue ( JBLU), and Halliburton ( HAL). E-Loan ( EELN) said Monday that it has entered an agreement with eBay ( EBAY) to provide financing for automobiles and motorcycles purchased through the online auction service. E-Loan shares rose sharply by 40 cents, or 13.4%, to $3.38. eBay shares dropped $3.68, or 4.3%, to $82.37. Shares of Pfizer ( PFE) fell even after a federal appeals court upheld a ruling in favor of the company in a case filed against it by Teva Pharmaceuticals ( TEVA) over the antidepressant Zoloft. Pfizer lost 22 cents, or 0.9%, to $24.26. The SEC said it has ended its informal inquiry into Corinthian Colleges ( COCO) with no enforcement action recommended. The SEC had conducted the review in September regarding the company's financial performance projections. Shares finished up, gaining $1.74, or 10.2%, to $18.86. Shares of Pharmos ( PARS) rose more than 1% after the company said it received a $12.1 million payment from former marketing partner Bausch & Lomb ( BOL). Pharmos closed up 2 cents to $1.17. In broker action, CIBC upgraded McDonald's ( MCD) to sector outperform and downgraded Wendy's ( WEN) to sector perform. The brokerage cited greater competition from McDonald's in premium products and had concerns about Wendy's performance in the more competitive environment. McDonald's gained 49 cents, or 1.6%, to $31.74 while Wendy's lost 42 cents, or 1.1%, to $37.33. Overseas markets were mostly lower, with London's FTSE 100 closing up 0.2% to 4812 and Germany's Xetra DAX down 0.3% to 4201. In Asia, Japan's Nikkei lost 0.4% overnight to 11,238, while Hong Kong's Hang Seng fell 0.5% to 13,481.