Stocks Mixed on Profit Warnings
NEW YORK (AP) - Pleased by positive earnings reports but unnerved by profit warnings from Microsoft and Corning, investors bought stocks tentatively Friday. Wall Street's major indexes were narrowly mixed as a surge in consumer prices added added to the market's cautious tone.
Investors maintained their focus on the future, largely disregarding better-than-expected results from some companies, including Microsoft and Corning.
Prices were down for much of the session before turning higher in the last hour of trading.
The Dow Jones industrial average was up 40.89 at 9,204.11 just after 4 p.m. EDT.
The broader market was mixed. The Nasdaq composite index rose 18.58 to 1,671.30.
Analysts said investors' caution was to be expected given how they had been anxiously anticipating the release of third-quarter earnings, which began in earnest this past week. While investors were expecting even weaker results following the Sept. 11 terrorists attacks, they were hopeful companies would offer bullish statements about future business. So far, few companies have offered such optimism and the market has suffered for it.
``People are always hoping for more,'' said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co. in New York. ``But there's not a lot of reassurance there ... that we are through this.''
Wanting to hear that business is improving, investors on Friday sold off shares of companies that while beating earnings expectations for the past quarter warned of weaker results in the future.
Microsoft, which surpassed expectations late Thursday, slipped 16 cents to $56.59 after also warning that second-quarter and full-year earnings results would fall short of expectations.
Corning on Friday copied Microsoft, beating forecasts but warning of reduced profits in the fourth quarter. The world's largest fiber-optics maker declined 33 cents to $7.69.
One of Wall Street's biggest losers was eBay, which slid 11 percent, down $6.70 at $52.36, after raising its fourth-quarter expectations to the level that analysts' were already expecting. Investors sold the Internet auction company lower despite its better-than-expected third-quarter results.
Analysts said that investors are particularly concerned with what companies have to say about the future, and to what extent the attacks, which happened just three weeks before the end of the Sept. 30 quarter, will impact business.
``The third quarter is pretty much a look in the rearview mirror. What is more significant for the market is this quarter and next quarter,'' said Jon Brorson, director of equities at Northern Trust in Chicago.
Gainers included companies that met or surpassed analysts' earnings expectations and said business is getting better. Nokia, which beat forecasts by 2 cents a share and said it expects stronger earnings in the fourth quarter, rose $1.18 to $19.96. Gillette, which met targets, advanced $1.43 to $31.15.
The market was also worried that the United States will suffer more terror attacks as it retaliates for last month's assaults and that more citizens will be exposed to the bacterial disease anthrax.
Meanwhile, the biggest increase in inflation at the consumer level since May unnerved the market, which is hoping that the Federal Reserve will continue to lower interest rates to help the economy. The Consumer Price Index rose 0.4 percent, pushed higher by the biggest jump in gasoline prices in 15 months, the Labor Department reported.
Declining and advancing issues matched each other on the New York Stock Exchange. Volume was 979.28 million shares, compared with 986.26 million shared traded at the same point Thursday.
The Russell 2000 index, the gauge of smaller company stocks, inched rose 4.52 to 425.58.
Overseas markets were mostly lower Friday. Japan's Nikkei stock average ended the day with a gain of 0.6 percent, but European stocks were lower. Britain's FT-SE 100 fell 1.9 percent, France's CAC-40 lost 1.7 percent and Germany's DAX index declined 1.3 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Originally published October 19, 2001.
