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Stocks Ease on Dull Forecasts

October 18, 2003|From Reuters and Bloomberg News

Stocks slumped Friday as disappointing business forecasts from companies such as online auctioneer EBay spurred investors to lock in gains from this week's run-up to the highs of the year.

The major market gauges this week hit levels not seen since early 2002 on the back of generally strong corporate earnings, but investors are growing concerned that much of the positive news has been priced into the market.

The Dow Jones industrials lost 69.93 points, or 0.7%, to 9,721.79; the Standard & Poor's 500 index fell 10.75 points, or 1%, to 1,039.32; and the Nasdaq composite index dropped 37.78 points, or 1.9%, to 1,912.36.

Losers beat winners by more than 2 to 1 on the New York Stock Exchange and Nasdaq in moderate trading.

For the week, the Dow rose 0.5% and the S&P 500 added 0.1%, notching their third straight winning week. Nasdaq eased 0.2%, snapping a two-week winning streak.

This week was one of the busiest of the third-quarter earnings season, and results have generally landed in line with expectations. But investors had been hoping that companies would also point to strong growth in the quarters ahead to help justify further stock gains.

On Friday, EBay was one of the biggest losers in the S&P 500 after it disappointed investors with a lower-than-expected 2004 profit forecast. Its shares fell $2.64 to $54.86.

Insurer XL Capital added more pressure to the market after it slashed its third-quarter profit forecast, citing losses on its reinsurance business. Its stock tumbled $6.03 to $73.37.

Reports earlier in the day showed that consumer sentiment rebounded in early October and that home builders accelerated new construction in September.

Treasury yields backed off a bit after approaching one-month highs in recent days. The yield on the benchmark 10-year Treasury note slipped to 4.39% from Thursday's close of 4.46%.

In other highlights:

* Internet marketing company DoubleClick tumbled $2.98, or 24.4%, to $9.26. The company said it missed revenue estimates for the third quarter, and offered guidance for 2004 that was below Wall Street forecasts. A key index of Internet-related shares lost almost 3%.

* Natural gas futures fell almost 7% in New York trading, their biggest one-day decline in almost four months, as rising inventories signaled reduced demand for spot supplies during the cold-weather months. Crude oil fell 87 cents to $30.67 a barrel.

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