Wednesday October 13, 2004 (4:43 pm ET)
Stocks Finish with Losses
Good news from tech titans Intel and Yahoo! wasn't enough to overcome a fresh surge in oil prices
Stocks ended lower on Wednesday with the Dow industrials barely over the psychologically important 10,000 level after a spike in oil prices overshadowed upbeat profit reports from tech bellwethers Intel (INTC) and Yahoo (YHOO).
The Dow Jones industrial average finished off 75.51 points, or 0.75%, to 10,001.67. The broader Standard&Poor's 500 index was off 8.27 points, or 0.74%, to 1,113.57. The tech-heavy Nasdaq composite index dropped 4.64 points, or 0.24%, to 1,920.53.
Looking ahead, Thursday brings another raft of high-profile earnings reports, including results from drugmaker Abbott Laboratories (ABT), discount carrier Southwest Airlines (LUV), financial-services giant Citigroup (C), and server maker Sun Microsystems (SUNW).
On Thursday's economic data calendar, the U.S. trade gap in August is expected to have widened to $51 billion from $50.15 billion in the previous month. Meanwhile, first-time jobless claims are expected to show a rise to 349,000 from 335,000 in the week ended Oct. 9.
Stoking the selling on Wednesday was news that crude oil rose by $1.13 to $53.64 a barrel after dropping below the $52-a-barrel level earlier in the session. Higher energy costs can crimp corporate profits. Among the big decliners on the Dow was aluminum producer Alcoa (AA) after Prudential issued a negative outlook on the metals sector.
Keeping the Nasdaq from bigger losses was Intel, the world's largest chipmaker, which posted 15% higher third quarter earnings on higher sales. But the company said there was weak demand for its desktop computer microprocessors and that it was facing growing competition.
Meantime, Yahoo, the Internet media company, reported that its quarterly profit nearly quadrupled as its website has had huge success selling ads.
Bucking the downtrend in the Dow was fast-food giant McDonald's (MCD), which posted 42% higher third-quarter profits thanks to strong sales in the U.S. and a lower tax rate.
In other stocks news, Harley-Davidson (HDI), which makes motorcycles, posted record quarterly profits, lifted strong demand for its new models.
Consulting firm Accenture (ACN) reported a higher quarterly profit but warned that current quarter profits could be slightly below analysts' estimates.
Media company The New York Times (NYT), which runs the New York Times and Boston Globe newspapers, posted 4% lower third-quarter earnings despite higher advertising revenues. The company said investments in expanding its flagship newspaper and The International Herald Tribune were in part to blame.
Treasury Market
Treasuries finished higher on Wednesday after plunging commodity prices, especially copper prices, suggested global economic weakness, says Informa Global Markets. Also, rising tensions in Iraq and option put sales stemmed any losses in bonds. Later in the session, Treasuries surged on the reversal in oil.
World Markets
European stock markets closed mixed on Wednesday. London's Financial Times-Stock Exchange 100 index was off 13.10 points, or 0.28%, to 4,634.80 as U.K. September unemployment claims fell 200,000, the jobless rate remained unchanged at 2.7%, earnings were strong at 3.9%, and oil prices headed lower. Numis was higher after the company rejected a takeover offer from an unidentified company.
Germany's DAX index gained 9.55 points, or 0.24%, to 3,976.03 as crude oil prices plunge on profit taking from a recent surge. Infineon Technologies was higher in reaction to Intel's higher earnings and improved inventories outlook. Hannover Re and Munich Re were higher as some analysts are upbeat on stocks now that they have taken steps to lower earnings forecasts due to a string of U.S. hurricanes and Pacific typhoons. Adidas-Salomon was lower after reporting a first-half slump in soccer-shoe sales in Germany.
France's CAC-40 index was up 5.59 points, or 0.15%, to 3,694.32, as French September CPI rose 0.2%, down from 0.3% in August and oil prices skidded on profit taking. STMicroelectronics and Alcatel were higher in sympathy with Intel's higher earnings. Carrefour was lower after saying it won't meet targets.
In Asia, Japan's Nikkei average lost 5.82 points, or 0.05%, to 11,195.99 as gains in high tech stocks were offset by declines in oil exploration firms as crude oil prices headed lower after a run of 5 consecutive closing highs.
In Hong Kong, the Hang Seng index fell 80.01 points, or 0.60%, to close at 13,171.58.
