Stocks fall on tech, earnings worries

Stocks fall on tech, earnings worries

	Published : Mon, 22 Jan 2007 21:31 By : Agencies Print this Story

NEW YORK (AFX) - Stocks skidded lower Monday as growing concerns over technology companies led jittery investors to pull money out of the market.

The steep decline continued the market's recent erratic trading pattern, with investors cautious about the direction of the economy and treading carefully ahead of this week's big wave of earnings reports. The tech sector so far has been knocked down the most, after Apple Inc.'s and Intel Corp.'s outlooks last week fell below the Street's expectations.

With industry leaders like Qualcomm Inc. and Microsoft Corp. releasing their financial results later this week, many investors are avoiding the sector and bracing themselves for disappointing reports.

'The market is nervous,' said Joe Ranieri, managing director in equity trading at Canaccord Adams. 'We have had a few good quarters in a row in tech land. The problem with having good quarters is, it gets harder and harder to impress.'

Blue chip stocks were also dragged down by a Wachovia analyst's downgrade of Boeing Co., citing possible aircraft order delays from the jet maker.

Overall, earnings reports and economic data this year have signaled growth that's cooling, but not so quickly that it is squeezing corporate profits. This would normally be good news for the stock market, but investors have been retreating -- wisely, many market watchers say -- on signs they may have gotten ahead of themselves late last year, when the Dow began racing into record territory.

In midafternoon trading, the Dow fell 92.13, or 0.73 percent, to 12,473.40, after dropping by more than 114 points earlier in the session.

Broader stock indicators also dropped. The Standard & Poor's 500 index was down 5.83, or 0.41 percent, to 1,424.67, and the Nasdaq composite index was down 17.34, or 0.71 percent, to 2,433.97.

Bond prices rose although investors' hopes for an interest rate cut have dwindled in response to upbeat economic data. The yield on the benchmark 10-year Treasury note edged lower to 4.76 percent from 4.78 percent late Friday.

The dollar was mixed against other major currencies, while gold prices also rose.

The stock indexes rebounded slightly from the session's lows after crude oil resumed its downtrend, and American Express Co. reported that its profit rose last quarter thanks to robust spending during the holiday season.

Oil fell 90 cents to $51.09 a barrel Monday on the New York Mercantile Exchange. Crude is down about 15 percent on the year, and traded briefly below $50 a barrel last week.

American Express rose 29 cents to $58.38.

The lift from oil wasn't enough to offset technology-related worries, though. Tech stocks extended their decline on analyst downgrades of Cisco Systems Inc., the world's largest networking equipment maker; Motorola Inc., the world's second largest cell phone maker; and computer maker Dell Inc.

Cisco fell 14 cents to $26.56; Motorola fell 73 cents, or 3.79 percent, to $18.54; and Dell dropped 55 cents, or 2.2 percent, to $24.47.

Texas Instruments Inc., which makes chips for cell phones, reports its financial results after the market closes Monday. A strong outlook and profit could help revitalize the sector, but anything below the average Street estimate of 38 cents a share could deliver another blow to tech stocks.

Texas Instruments rose 16 cents to $28.55.

Investors also sold tech stocks ahead of Advanced Micro Devices Inc.'s financial results and outlook, scheduled for Tuesday and expected to show a tough pricing environment and competition from rival Intel Corp.

Advanced Micro fell 36 cents, or 2 percent, to $17.37, after Intel and Sun Microsystems announced an alliance that could take away some business from Advanced Micro.

The technology-dominated Nasdaq is still up on the year, though, and tech stocks have the potential to rebound once earnings season winds down, Ranieri said.

'If we get through the next few weeks without distastrous earnings, some buyers will start picking up the stocks that are getting beat up now,' he said.

Another worry weighing on the market is the direction of interest rates. A report from the Chicago region's Federal Reserve indicated above-trend growth in December for the first time in four months -- yet another argument for U.S. Fed policy makers keeping rates on hold, or perhaps even hiking them.

The market is in a tug of war right now over whether interest rates will be raised or lowered later in the year, said Jim Herrick, manager and director of equity trading at Baird & Co. 'Also, some believe oil will continue to go lower, some believe oil will go back to the levels of last year ... There's two camps right now, and that's why we are having this volatility.'

Pfizer Inc., the world's biggest drug maker, reported better-than-expected earnings but also that it is cutting 10,000 jobs in an effort to slash costs. Pfizer fell 28 cents to $26.94.

Boeing fell $3.18, or 3.6 percent, to $85.45 after Wachovia's downgrade.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.12 billion shares.

The Russell 2000 index of smaller companies was down 5.80, or 0.74 percent, at 779.36.

Overseas, Japan's Nikkei stock average rose 0.66 percent. Britain's FTSE 100 was down 0.30 percent, Germany's DAX index was down 0.89 percent, and France's CAC-40 was down 0.62 percent.