US Stocks Drop on Earnings
U.S. stocks dropped after earnings from Microsoft Corp. and sales at Coca-Cola Co. fell short of analysts' estimates. The Standard & Poor's 500 Index and Dow Jones Industrial Average completed their longest string of weekly declines since October 2002.
Amazon.com Inc., the world's largest Internet retailer, tumbled after reporting lower-than-expected profit and sales. Maytag Corp., Electronic Arts Inc. and Foundry Networks Inc. slid after giving forecasts that lagged previous targets.
Expectations were very high and the Street is clearly disappointed these companies didn't beat'' them, said Steve Neimeth, who manages the $340 million SunAmerica Growth and Income Fund in Jersey City, New Jersey.
The S&P; 500 shed 10.63, or 1 percent, to 1086.21, its lowest since May 17. The Dow average lost 88.11, or 0.9 percent, to 9962.22, its first close below 10,000 since May 24. The Nasdaq Composite Index fell 39.97, or 2.1 percent, to 1849.09, a level not seen since Oct. 2, 2003.
Since last Friday, the S&P; 500 dropped 1.4 percent and the Dow average shed 1.8 percent, their biggest weekly declines since April 30. The S&P; 500 fell for the sixth straight week and the Dow completed its fifth week of declines amid concern higher borrowing costs and oil prices will hurt earnings. The Nasdaq lost 1.8 percent in the period.
Today, two stocks fell for every one that rose on the New York Stock Exchange. Some 1.3 billion shares changed hands on the Big Board, 4.6 percent less than the three-month daily average.
S&P; 500 companies increased earnings 24 percent in the second quarter after a 27.5 percent jump in the first, according to analysts surveyed by Thomson Financial. They predict growth will ease to an average 15 percent this period.
We know coming into the second half of this year we would probably see an earnings slowdown,'' said Jeffrey Swensen, head trader at Batterymarch Financial Management, which oversees $12 billion in assets in Boston.
The Federal Reserve on June 30 raised borrowing costs for the first time in four years and reiterated its pledge to increase its benchmark interest rate at a "measured'' pace.
Stocks also declined as crude oil for September delivery climbed 0.9 percent to $41.71 a barrel in New York.
Microsoft, the No. 1 software maker, lost 97 cents to $28.03. The company said fiscal fourth-quarter profit before an options-related expense and a tax gain was 28 cents a share. Analysts in a Thomson poll expected an average of 29 cents.
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