Mixed profit reports muddle stocks
A weak profit outlook from 3M Co. disappointed Wall Street on Monday, leaving stocks mixed as investors grew worried that second-half profits will fall short of expectations. Technology shares eked out minimal gains in advance of Microsoft Corp.’s earnings later in the week.
While second-quarter earnings, including 3M’s, have generally beaten estimates, investors are now focusing on the rest of 2004, worried that profit growth will slow even as interest rates rise and consumer spending drops off.
“We’re looking at these outlooks hoping for some kind of sign on what the economy’s going to do in the third and fourth quarter, and nobody wants to jump until then,” said Bill Groenveld, head trader for vFinance Investments. “Right now, there’s no volume, no trends to follow. People like to follow trends, but nobody’s sticking their neck out to make one.”
Many investors were waiting for Federal Reserve Chairman Alan Greenspan’s testimony before a Senate committee on Tuesday and Microsoft’s earnings, due late Thursday.
The Dow Jones industrial average fell 45.72, or 0.4 percent, to 10,094.06. The Dow was down more than 74 points earlier in the session.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index slipped 0.49, or 0.04 percent, to 1,100.90, and the tech-heavy Nasdaq composite index, which was heavily sold off over the past two weeks, was up 0.68, or 0.04 percent, at 1,883.83.
While 3M beat its second-quarter profit estimates by a penny, the manufacturing giant said its third-quarter profits would be slightly lower than expected, taking many investors by surprise. 3M tumbled $4.79 to $83.05.
Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 1.31 billion shares, compared with 1.44 billion at the same point on Friday, when turnover was inflated by options expirations.
The Russell 2000 index of smaller companies was down 0.75, or 0.1 percent, at 554.73.
Overseas, Japan’s Nikkei stock average rose 0.2 percent. Britain’s FTSE 100 closed down 0.4 percent, France’s CAC-40 dropped 0.5 percent for the session, and Germany’s DAX index fell 0.9 percent.