Cautious reports deflate markets

IBM and Microsoft issue bleak outlooks for the year, leading the Dow to a three-day loss of nearly 256 points.

©Associated Press
January 18, 2003

NEW YORK -- Wall Street slid to its first weekly loss in 2003 Friday, as sluggish outlooks from Microsoft and IBM fed investor pessimism about the economy and sent stocks lower.

The tech-focused Nasdaq suffered its biggest loss in more than five weeks, while the three main gauges all fell to their lowest levels since Dec. 31, before investors started picking up stocks on hopes of better market prospects for the new year.

"The news today coming from two key bellwethers is taking away some of the recent enthusiasm," said Steven Goldman, chief market strategist at Weeden & Co.

The Dow Jones industrial average declined 111.13, or 1.3 percent, to close at 8,586.74, for a three-day loss of nearly 256 points.

The broader market also finished lower. The Nasdaq composite index dropped 47.56, or 3.3 percent, to 1,376.19. The Standard & Poor's 500 index fell 12.82, or 1.4 percent, to 901.78.

For the week, the three gauges snapped a two-week winning streak, with the Dow losing 2.3 percent, the Nasdaq declining 4.9 percent, and the S&P 500 falling 2.8 percent.

IBM fell $4.75 to $81.30 after the computer company reported a drop in fourth-quarter profits that nonetheless beat analysts' estimates. However, it also issued a cautious outlook for 2003.

Microsoft dropped $3.89 to $51.46 after the softwaremaker said it would issue its first dividend and reported profits that slightly beat Wall Street's expectations. The company also announced plans for a two-for-one stock split, but said it didn't see signs of improving demand.

"The trend so far is that most of the companies are beating expectations for the fourth quarter, but are talking rather pessimistically for the rest of the year," said Stephen Massocca, president of Pacific Growth Equities.

"Earlier in the year, we had a rally based on the feeling that companies will come in better than expected. That did happen, but the problem is that it may not continue," Massocca said.

A trio of disappointing economic reports also weighed on stocks: the University of Michigan's midmonth report on consumer sentiment fell; the Federal Reserve reported that production in the nation's industrial sector unexpectedly dipped; and the U.S. trade deficit grew.

© 2006 • All Rights Reserved • Tampa Bay Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright