U.S. Stock Indexes Lower On Cautious Corporate Outlooks
NEW YORK (MarketWatch) -- U.S. stocks slid on Tuesday with the technology sector hammered by disappointing earnings reports and bleak forecasts from Texas Instruments Inc. and Sun Microsystems Inc.
"The real problem is not so much the earnings themselves, but the guidance, which is murky," said Peter Cardillo, chief market economist at Avalon Partners.
Down nearly 200 points early on, the Dow Jones Industrial Average was more recently off 121.94 points, or 1.5%, to 9,143.49.
Of the Dow's 30 components, 24 were lower, with Citigroup Inc. fronting the losses on the blue-chip index, its shares off 9% in the wake of its downgrade by Goldman Sachs, which advised clients to sell Citicorp shares. .
In addition to information technology, energy proved the hardest-hit sector, with oil giants and Dow components Exxon Mobil Corp. and Chevron Corp. both down more than 5% as crude futures fell below $70 a barrel.
The slide into negative terrain was furthered by worries about the day's slated settlement of Lehman Brothers' credit-default swaps.
"Settlement of Lehman's CDS is what has the market on the nervous side. However, if the total amount of losses is less than the market is expecting, we could see a resumption of an upward trend that could take the Dow back above 10,000 in a short period of time," said Cardillo.
Also weighing on the Dow, Caterpillar Inc. fell 4.7% after the heavy-equipment maker reported a third-quarter profit decline of 6% from the year-ago period, but held firm to its previous target of $6-a-share profit for 2008.
Chemical giant DuPont slipped 6.2% after cutting its earnings outlook.
Bright spots on the Dow included American Express Co. , up 6.5% after it reported a smaller-than-forecast 24% profit fall for the third quarter late on Monday.
Pfizer Inc. rose 1.2% after tripling its third-quarter profit.
Also on the rise, 3M Co. advanced 4% after the diversified industrial behemoth reported a third-quarter profit gain of 5.8%. .
The S&P 500 fell 18.86 points, or 1.9%, to 966.54 and the technology-heavy Nasdaq Composite declined 48.34 points, or 2.7%, to 1,721.69.
Gold futures fell as a stronger dollar diminished the precious metal's appeal, with gold for December delivery losing $22 to end at $768 an ounce. .
Volume on the New York Stock Exchange exceeded 659 million, and decliners topped advancers more than 2 to 1. On the Nasdaq, nearly 507 million shares traded, and nearly one stock traded higher for every two on the decline.
Troubled trio
National City corp. , KeyCorp and fifth third Bancorp all said before Tuesday's opening bell that they lost money in the third quarter on charges due to bad loans.
Gloomy outlooks pressured Texas Instruments , its shares dropping 8.2%, and prompted downgrades from at least two brokers. .
Sun Microsystems Inc. dropped 17% as the network-server firm forecast a bigger loss than analysts had anticipated.
After the close, Yahoo Inc. and Apple Inc. are scheduled to report results, with expectations that Yahoo will announce job cuts.
Shares of Ford Motor Co. declined 7.7% after the holding company for billionaire investor Kirk Kerkorian said it might sell its entire 6% stake in the auto maker as it switches its focus to the gaming and energy sectors. .
Any turn around for Ford could be "five years down the road," according to Marty Padgett, editor of The Car Connection.
Before the opening bell, stock futures had pared declines on word of a new Federal Reserve money-market funding facility. .
On Monday, U.S. equities surged after a key inter-bank lending rate dropped and after Federal Reserve Chairman Ben Bernanke endorsed a second stimulus package. The Dow Jones Industrial Average rocketed 411 points, the S&P 500 added 44 points, and the Nasdaq Composite climbed 58 points.
By Kate Gibson