NEW YORK, (Reuters):
STOCKS SUFFERED their fifth straight session of decline yesterday, knocking the blue-chip Dow and the broad Standard & Poor's 500 into negative ground for the year, as weak outlooks from leaders like Eastman Kodak Co. chipped away at investor sentiment.
"Companies are limping through the earnings season and outlooks are pretty cloudy, so it's not giving investors hope for better things ahead in the near term at least," said John Forelli, senior vice president at Independence Investment LLC, which oversees US$19 billion.
Investors, battered by three down years on Wall Street, worry 2003 will be another tough year. Hopes for a speedy rebound in quarterly earnings fueled an early January rally, but tepid outlooks from corporate icons and persistent fears of a US war against Iraq have reined in that optimism.
Wall Street is fielding anaemic outlooks at the peak of the quarterly reporting season. Dow member Eastman Kodak sank almost 12 per cent after trimming its outlook and planning job cuts. Brokerage Merrill Lynch & Co. Inc. fell more than four per cent after warning of soft revenue barring a fundamental stock market improvement.
"The market got a little bit ahead of itself right out of the gates this year," said Andrew Baker, senior vice president of Nasdaq trading at investment bank Wedbush Morgan. "People got a little bit too optimistic in thinking that there is no way we are going to have a fourth down year."
The Dow Jones Industrial average fell 124.17 points, or 1.47 per cent, to 8,318.73, based on the latest available numbers, breaching its 2002 close of 8,341.63. The Dow had rallied as high as 6 per cent for the year by January 14.
The broad S&P 500 dropped 9.24 points, or 1.04 per cent, to 878.38, dipping under last year's close of 879.82.
The Nasdaq Composite Index eased 4.67 points, or 0.34 per cent, at 1,359.58. The technology-laced index is still up 1.8 per cent for the year after ending at 1,335.51 in 2002. The Nasdaq had been up more than 9 per cent earlier in the month.
Declining stocks beat out advancers by a ratio seven to four on the New York Stock Exchange and 20 to 13 on Nasdaq. More than 1.56 billion shares changed hands on the Big Board and more than 1.48 billion on Nasdaq in moderate trading.
FUTURE NOT SO BRIGHT?
Eastman Kodak, the No. 1 maker of photographic film, sank $4.41 to $33.18 and ranked as the biggest loser on the Dow. The company said it expected its first-quarter profit, excluding items, to fall far short of estimates and said it would cut up to 3 per cent of its work force after posting a lacklustre quarterly profit.
JP Morgan Chase & Co. Inc., the No. 2 US banking company, added more pressure to the Dow with a drop of 72 cents, or almost 3 per cent, to US$24.70. The company posted a larger fourth-quarter loss because of US$1.3 billion in charges to cover Enron-related losses and other legal battles.
But Lucent climbed 13 cents to US$1.81. The company posted its 11th straight quarterly loss amid lower sales but said it expects fiscal second-quarter sales to rise by 20 per cent, thanks especially to robust wireless demand.
