Jitters over third-quarter corporate earnings continued to weigh on stocks Thursday, and after the market closed another major technology company suggested there is indeed reason to worry.
While the Dow Jones industrial average ended with a modest loss of 58.30 points, to 7,660.98--after falling to 7,580 at midday--Motorola announced after the close of regular trading that its third-quarter profit will be "significantly" below expectations.
The announcement, which sent Motorola stock down $8.38 to $66 in after-hours trading, could trigger more selling of technology shares and multinational shares today.
On Thursday stocks ended mostly lower but well up from their weakest levels of the day, even though bond yields rose.
Losers topped winners by 18 to 11 on the New York Stock Exchange and by 22 to 20 on Nasdaq. The Russell 2,000 index of small stocks edged lower for a second day, easing 0.97 point to 435.93.
Still, the Russell has surpassed the Dow on a year-to-date basis in recent days, and now is up 20.2% versus the Dow's 18.8% rise.
Profit fears helped depress the market Thursday, as specialty glass maker Corning joined a growing list of big-name companies warning that current-quarter results won't meet Wall Street expectations.
Corning blamed slower-than-expected sales of fiber optic cable. The company's stock sank $5.44 to $41.94 in very heavy trading.
But Motorola's shocker after trading closed was far more unsettling--in part because Motorola cited weaker-than-expected sales of its pagers in China.
Because economic growth in Southeast Asia is expected to slow in the wake of the plunge in the region's currencies and stock markets since early-July, Motorola's troubles in China could exacerbate concerns about U.S. multinational companies earnings in general.
Motorola said earnings also will be hurt by weaker pager sales in the United States, and by a charge related to its decision to stop making Macintosh clone computers.
Despite the news, some analysts noted that profit warnings are typical at this time in the quarter--but that such warnings don't necessarily indicate the broad trend in corporate earnings.
"As you near the end of the quarter, you get a lot of nervousness about upcoming earnings and with several very big companies' warnings of disappointing earnings, the market takes some hits," said James Crawford, senior vice president of Trevor Stewart Burton & Jacobsen Inc.
Today, fresh economic data, including August wholesale inflation data, could rile markets. Bond yields rose on Thursday in advance of the reports. The bellwether 30-year Treasury bond yield ended at 6.69%, up from 6.65% Wednesday and the highest since July 2.
But one well-known market bull continued Thursday to advise clients to stay optimistic.
Goldman, Sachs & Co.'s strategist, Abby Joseph Cohen, told Investor, a French business magazine, that U.S. stocks have "reached a plateau and I think it will take a little time before we return to the summits, but we shouldn't go much lower. Based on profit estimates for the coming two years, I would say Wall Street is notably undervalued."
Among Thursday's highlights:
* Blue-chip losers included Disney, down $2 to $75.75; International Paper, down $1.63 to $51.88; and Coca-Cola, down $1.31 to $56.13. But AT&T gained $1.06 to $43 and Procter & Gamble rose $2.06 to $131.50.
* Tech stocks were mixed, with Ascend Communications down $2.19 to $37.81 while Microsoft added $1.69 to $136.81 and IBM was up $1 to $98.
* Airline shares were strong, with Delta up $1.25 to $100.75 and US Airways up $1.06 to $38.38.
Market Roundup, D6