Nike Warning Shakes Wall Street Confidence
Smaller-company stocks set a new high for the fifth straight session, but blue chips stumbled Thursday as a warning from Nike fed fears that company profits won’t justify the market’s lofty levels.
The Dow Jones industrial average fell 27.05 to 7,330.18, and has now slipped back by about 53 points after reaching a record high close Tuesday.
The Nasdaq market also succumbed to some profit-taking, particularly among bellwether technology shares, after closing at record highs for three straight sessions.
“When you get up this high, there isn’t much room for disappointment, and you saw that today,” said William M. Lefevre, senior market analyst at Ehrenkrantz King Nussbaum, noting Nike’s discouraging profit forecast. “But I don’t think this is a peak. The market is right now in a pause - a mini-consolidation from a pretty good run.”
Advancers outnumbered decliners by more than a 4-to-3 margin on the New York Stock Exchange, where volume was modest at 460.48 million shares as of 4 p.m., down from 487.19 million in the previous session.
Some of the stocks that moved substantially or traded heavily Thursday:
NYSE
Nike, down 8-5/8 at 55-3/8.
The sports apparel maker, based in Beaverton, Ore., warned that poor sales and a factory shutdown would push profits below expectations for its fourth quarter ending May 31.
Kimberly-Clark, down 2-1/8 at 50.
Merrill Lynch and Bear Stearns cut their ratings on the paper and consumer products company, the Dow Jones News Service reported, citing contacts at the investment firms.
Rohr, up 2-3/8 at 20-3/8.
The maker of jet engine parts reported that profits for its third quarter ended May 4 more than doubled, bolstered by rising demand for commercial jets.
Seagate Technology, down 4 to 40-3/8.
The stock fell amid reports that Seagate intends to cut back production of disk drives in Singapore.
NASDAQ
Boston Chicken, down 1-3/8 at 16-3/4.
The president and chief executive of the Boston Market restaurant chain resigned, the company announced, citing slumping dinner sales. Larry Zwain will remain a director at Boston Chicken.
Novell, down 7/32 at 7-27/32.
The maker of networking software reported a wider-than-expected loss for its second quarter ended April 30. Novell also announced late Wednesday it will lay off 1,000 employees as it tries to streamline costs and focus on Internet software.
OzEmail, up 3/4 at 6-1/2.
Metro Holding of Germany agreed to buy a 40 percent stake in a new joint venture that will use OzEmail’s technology for making telephone calls over the Internet.