Wall Street in retreat
Wall Street retreated today as investors, worried that fourth-quarter earnings might not meet heightened expectations, decided to cash in some of their recent profits.
Analysts said the selling reflected concerns about whether upcoming earnings reports would justify the market’s recent surge.
The anxiety overshadowed Federal Reserve chairman Alan Greenspan’s comments that the weakening US dollar and disappointing jobs data were not barriers to the economic recovery.
“We’re in earnings season so that’s completely dominating what most market watchers are looking at,” said Brian Bruce, director of global investments, PanAgora Asset Management in Boston. “They want to see no disappointments.”
According to preliminary calculations, the Dow Jones industrials closed down 58.00, or 0.6%, at 10,427.18.
Broader stock indicators also fell. The Standard & Poor’s 500 index slipped 6.01, or 0.5%, to close at 1,121.22, and the Nasdaq composite index lost 15.34, or 0.7%, to 2,096.44.
Trading has been uneven so far this week as the market waits for earnings news. Analysts said investors are particularly nervous about technology stocks, which have enjoyed some of the most significant gains even as the number of new jobs fell far short of expectations in December and the US dollar continued to lose ground against the euro.
Intel’s earnings report, due out tomorrow, was anxiously awaited by investors looking for signs that the upswing in technology stocks is sustainable. The Nasdaq composite index, which has a large technology component, has been trading at levels not seen in two years, and not everyone is convinced that the valuations are warranted.
“If Intel has a hiccup, it could burst this whole bubble on tech, at which point the whole rally could fall off,” said Bill Groenfeld, head trader for vFinance Investments. “If it does well, then we can reassess where we are and we can take off again.”
Declining issues led advancers 4 to 3 on the New York Stock Exchange. Volume was brisk.
The Russell 2000 index of smaller companies closed down 1.85, or 0.4% at 581.16.
