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Stocks Slip as Investors Await Earnings Data

October 09, 2003|From Times Staff and Wire Reports

Stocks snapped a five-session string of gains Wednesday as investors took profits from the recent run-up and awaited next week's flood of earnings reports.

In other markets, the dollar continued to tumble against other currencies. Treasury bond yields stabilized thanks to decent demand at an auction of new five-year notes.

The Dow Jones industrial average dropped 23.71 points, or 0.3%, to 9,630.90, and the Standard & Poor's 500 index slipped 5.47 points, or 0.5%, to 1,033.78.

The technology-laced Nasdaq composite index fell 14.07 points, or 0.7%, to 1,893.78.

Losers led winners by 9 to 8 on the New York Stock Exchange and by 10 to 7 on Nasdaq in active trading.

Stocks had rebounded sharply in recent days, lifting key indexes on Tuesday to just below their 52-week closing highs reached in mid-September.

But strong third-quarter corporate earnings probably are already baked into stock prices, many analysts say.

"It may come down to the kind of guidance that corporations give for their corporate outlook going forward," said David Memmott, head of listed block trading at Morgan Stanley.

About three-fourths of the companies in the S&P 500 will report quarterly results by the end of October.

The S&P index had gained 4.3% in the five sessions preceding Wednesday's on expectations that earnings would exceed forecasts.

Investors' mood is considerably more upbeat than it was a year ago today -- which was when major indexes reached their lowest levels of the bear market that began in 2000. Since then key indexes have risen between 30% and 70%.

On Wednesday, telecommunications stocks helped pull the market down. SBC Communications, the second-largest U.S. local-telephone company, lost 75 cents to $22.16. Verizon Communications, the biggest, fell 82 cents to $32.68. BellSouth declined 49 cents to $24.10. All three companies have mobile-phone operations.

A new federal rule effective Nov. 24 will allow customers to keep their phone numbers when they change wireless companies. That will increase "churn," or the number of people who switch wireless carriers, said John C. Thompson of Thompson Plumb Investment Management. Increased turnover in customers will lead to price cuts and higher costs, he said.

"The wireless industry is going to get very ugly," said Thompson.

The spotlight also was on General Electric and Vivendi Universal after they said they had signed a final deal to merge their show business companies. GE's shares slipped 53 cents to $30.20 and were among the NYSE's most active stocks.

The dollar continued its slide as traders concluded that the greenback would have to weaken further to trim the huge U.S. trade deficit.

The buck fell to a new three-year low of 109.57 yen in New York trading, down from 109.79 on Tuesday. The euro climbed to $1.181 from $1.177.

In the Treasury market, yields eased as solid demand for new five-year notes, particularly from foreign central banks, assuaged concerns of traders that the auction might flop.

Investors were concerned that the recent slide in the dollar might make U.S. assets less attractive to foreign institutions, which are huge holders of Treasury debt. That anxiety proved unfounded.

The sale of $16 billion in five-year T-notes went at a slightly lower-than-expected yield of 3.14%, the government said.

The yield on the benchmark 10-year T-note ended the day at 4.24%, down from 4.26% on Tuesday.

Oil fell 60 cents to $29.81 a barrel in New York after the federal government said U.S. oil inventories last week jumped by almost five times the amount some analysts had expected.

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