Stocks fell today, as chilling forecasts from two of the market's biggest blue-chip names, including computing giant Hewlett-Packard, idled buyers in an early June rally.
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HP warned the slowdown in information technology was going global, while banking powerhouse J.P. Morgan Chase, a fellow component of the Dow average, said it expects lower trading revenues in the quarters ahead.
The Dow Jones industrial average fell 105.60 points, or 0.94 percent, to 11,070.24, according to the latest data. The Nasdaq composite index shed 15.93 points, or 0.71 percent, to 2,217.73. The benchmark Standard & Poor's 500 index
lost 13.54 points, or 1.05 percent, to 1,270.03.
HP shares fell $1.34, or 4.46 percent, to $28.71, while J.P. Morgan Chase gave up $1.66, or 3.42 percent, to $46.84. Combined, the declines in these two stocks accounted for almost 20 percent of the Dow's drop. Before today, the market had risen for four days in a row.
"Earnings concerns are going to continue to bedevil the market," said Jack Shaughnessy, chief investment strategist at Advest. "Companies in the middle of June begin to make announcements about second-quarter earnings, and those announcements may not be very positive."
Elsewhere, investors were particularly on edge with computer chip giant Intel scheduled to give a preliminary report on its quarter ending June 30, Thursday. Intel rose 9 cents to $29.82.
Oil shares fell in line with crude oil prices, which fell after inventory data soothed worries that Iraq's halt of exports would cause a supply crunch in the U.S. market. Oil services giant Exxon Mobil fell $2.15 to $89.40.
Network computer maker Sun Microsystems Inc. was the Nasdaq's most heavily traded share, up $1.07 at $18.09. Traders cited a research note from Goldman Sachs, which said that while the pain caused by "externally induced slowing, amplified by some internal miscues" is not behind the company, the worst of it is.
Last week, Sun cut its current quarter profit forecast and said sales would be 10 percent or more below Wall Street estimates because of economic weakness in Europe.
"The feeling among market participants is that the economy, if it hasn't turned yet, is about to turn, that the Fed's magic is working," said Peter Coolidge, managing director of equity trading at Brean Murray & Co., referring to the Federal Reserve's recent interest-rate cuts.
Still, traders are cautious.
"Obviously, everyone is going to keep an eye out for what pre-warnings we might get, so there's a caveat with this rally," Coolidge said.
On the rate-watch front, Federal Reserve Bank of Richmond President Alfred Broaddus said late Tuesday the central bank does not have much more room to help the flagging U.S. economy with interest-rate cuts because rates are already low. He added, though, that the economy may not have hit bottom yet.
The Fed's aggressive rate cuts — 2-1/2 percentage points so far this year — have helped underpin the stock market in recent months by raising hopes such action can re-energize the sagging U.S. economy. The Federal Open Market Committee, the Fed's policy-making body, next meets to determine the direction of interest rates on June 26-27.
Wall Street will be tuned in for a speech by Fed Board Governor Laurence Meyer this afternoon when he is scheduled to talk about "What happens to the New Economy" before the New York Association for Business Economics.