Wall Street shares - Nasdaq lower ahead of earnings

Market players are inclined to stay on the sidelines waiting to see how the economic recovery affects different companies and sectors, dealers said. Uncertainty about the Middle East crisis also inspired caution, dealers added.

"We've got cross-currents here," according to Art Cashin of UBS PaineWebber, who believes that the market is bogged down by a number of unknowns, and the mood remains cautious.

Ehrenkrantz, King & Nussbaum chief market strategist Barry Hyman said that today's trading pattern indicates "the clock is running out for the technology sector for this year." He added: "Money is flowing into the Old Economy names, and this may not change. Everything is related to consumer names and retail."

In order to break out of the current trading range, Hyman believes that Wall Street needs an improvement in bottom line results.

"We have to see some earnings improvement in 2002. But that's just not occurring," he said.

Oil stocks moved lower, in line with a decline in the price of crude after news of the limited Israeli withdraw and hopes that oil-producing states will not halt shipments. Exxonmobil was down $0.46 at $42.78 and ChevronTexaco fell $0.60 at 87.80.

Saudi Arabia also said it may pick-up the slack in supply left open by Iraq.

The telecom industry was also broadly lower after Verizon, down 1.16 at 43.05, said it will take a special first-quarter charge of $2.5bn (€2.84bn) and that its earnings per share is likely to be 72 cents, down from a prior projection of 72.

Nortel managed to trade up 0.11 at $3.69 after warning that its quarterly loss per share will be 14 cents, wider than the prior forecast of a loss of 13 cents and that quarterly revenues will not meet expectations.

Dealers said the market was not upset by the new warning because it had been widely anticipated.

Compaq was up 0.13 at 9.72 after its announcement late yesterday that it will match or exceed its first-quarter earnings target of $18m (€20.4m) or 1 cent per share.

IBM was up 0.40 at 87.81 after its drastic warning yesterday that its first-quarter earnings per share will be 67-70 cents, well off the prior projection of 85 cents.

Bankrupt retailer Kmart was down 0.10 at 1.10 as investors continued to assess its precarious relationship with its joint venture partner Penske Auto Centers with whom it jointly operates auto service and supply shops.

Over the weekend the US Bankruptcy Court for the Northern District of Illinois issued a temporary restraining order against Penske Auto Centers, requiring them to continue operating auto service centers at more than 550 Kmart stores across the United States.

Wal-Mart was up 0.51 at 60.29 after news that Salomon Smith Barney initiated coverage of the company with a 'buy' rating. Goldman Sachs also issued positive research on the stock.

The financial sector remained mixed, with investors awaiting more evidence of the stock market health. Citigroup was up 0.37 at 48.97, while Goldman Sachs was down 0.78 at 85.28.

Elsewhere in the industry, Merrill Lynch was down 1.04 at 52.41 after news that New York State Attorney General Eliot Spitzer initiated court action against it and demanded "immediate reforms" in its investment counseling services.

Spitzer said the court action was a result of an investigation that concluded that the brokerage's supposedly independent and objective investment advice was tainted and biased by the desire to aid Merrill Lynch's investment banking business.

Eastman Kodak was up 1.92 at 32.96 after Salomon Smith Barney, with an 'Outperform' rating, issued a positive note about the stock.

Genentech was down 0.73 at 42.12 ahead of its quarterly earnings later today. The company is expected to report first-quarter earnings per share of 22 cents, up from 17 a year earlier.