Stocks fall ahead of earnings reports
Stocks fell Monday as Delphi Corp.’s bankruptcy filing and lowered outlooks at Northrop Grumman Corp. and Xilinx Inc. set a gloomy tone on Wall Street ahead of quarterly earnings reports.
The market extended last week’s losses as investors grew anxious for third-quarter earnings to gauge the impact of hurricanes Katrina and Rita, and to get a glimpse of where the economy is headed as companies forecast future results. Stocks took a hit after Northrop said the hurricanes would hurt its 2005 profit, while chip maker Xilinx pegged its sales below previous targets.
“This is the time when you get profit warnings instead of earnings surprises,” said John Forelli, portfolio manager at Independence Investments LLC. “Once the reports start flying in next week, you typically get a lot of positive reinforcement from earnings.”
But the market got some good earnings news after the close, when Alcoa Inc. beat Wall Street forecasts and indicated that it expected its ongoing cost-cutting measures to help its competitiveness, and therefore its profitability, in the future.
Wall Street had some early support from a $7.5 billion acquisition in the insurance sector and a rating upgrade at International Business Machines Corp. But the major indexes slipped into negative territory and widened their losses after each shedding more than 2 percent last week.
Volume was light as many traders took the Columbus Day holiday off. The Dow Jones industrial average lost 53.55, or 0.52 percent, to 10,238.76.
Broader stock indicators were also lower. The Standard & Poor’s 500 index dropped 8.57, or 0.72 percent, to 1,187.33, while the Nasdaq composite index sank 11.43, or 0.55 percent, to 2,078.92.
The U.S. government bond market was closed Monday for the Columbus Day holiday. The dollar was mixed against other major currencies in European trading, and gold prices edged higher.
Oil prices eased slightly as traders weighed expectations for greater demand this winter against a report last week showing September consumption declined 3 percent in the face of record energy prices. A barrel of light crude slid 4 cents to $61.80 on the New York Mercantile Exchange.
Declining issues outpaced advancers by 23 to 9 on the New York Stock Exchange, where volume of 1.64 billion shares topped the 1.61 billion shares traded at the same point on Friday.
The Russell 2000 index of smaller companies was down 6.36, or 0.99 percent, at 637.97.
Overseas, Japan’s Nikkei stock average fell 0.99 percent. Britain’s FTSE 100 gained 0.23 percent, Germany’s DAX index added 0.30 percent, and France’s CAC-40 was higher by 0.16 percent.