Wall Street in retreat
Wall Street retreated today as wary investors followed a now-familiar pattern of locking in profits after a huge rally.
The Dow Jones industrials had their eighth straight triple-digit move, falling more than 180 points and wiping out more than half their gain of the previous session.
An earnings warning from Dow Chemical gave investors another reason to sell. But the decline was unsurprising given investors’ worries about earnings and the fact that the market has been unable to hang on to gains.
Investors also have been concerned about the possibility of war with Iraq.
“There is an awful lot of indecision, a lack of clarity as to where are we headed,” said Tim Leach, chief investment officer for Private Client Services.
Indeed, there was much indecision on Wall Street. The Dow was down more than 100 points in early trading, recovered to an advance of 30 points in the afternoon, and then turned sharply lower during the afternoon.
The blue chips closed down 183.18, or 2.3% at 7,755.61, according to preliminary calculations. The Dow has been in a pattern of enjoying one huge up day for every two or three big drops. Prior to Tuesday’s rally, the Dow suffered a two-day 406-point loss.
The broader market was also lower. The Nasdaq composite index fell 26.28, or 2.2% to 1,187.44. The Standard & Poor’s 500 index fell 19.99, or 2.4% to 827.92.
Earnings woes have fuelled much of the market’s recent sell-offs as analysts’ growth estimates for companies have fallen to about 8% from about 20%.
“We are still in (earnings) pre-announcement season and warnings are outpacing upwards guidance by about two to one,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.
Investors sold off stocks after disappointing earnings news from Dow Chemical, the nation’s second-largest chemical company which cut its third-quarter earnings estimate. Competitor DuPont also declined.
Declining issues outnumbered advancers about 2 to 1 on the New York Stock Exchange where volume was heavy.
The Russell 2000 index, which tracks smaller company stocks, fell 7.87, or 2.1% to 360.22.
