N E W Y O R K, June 19, 2001 -- Concern about weak company profits ruled WallStreet again today, foiling the market's attempts to rally onbullish comments from tech bellwether Oracle.
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Blue chips fell while technology stocks were more mixed, but theoverall market ended the session flat. Analysts weren't surprised,noting the rest of the nation's business picture remains murky.
"For every Oracle, there are still companies out there that areindicating difficulties with near-term earnings," said Richard E.Cripps, chief market strategist for Legg Mason of Baltimore.
The Dow Jones industrial average closed down 48.71 at 10,596.67,according to preliminary calculations, despite an earlier gain of94 points.
Broader stock indicators also struggled. The Nasdaq compositeindex rose 4.03 to 1,992.66, halting a seven-session losing streak,but still closing below 2,000 for a second straight day. Prior toMonday, the last time that the Nasdaq had finished that low wasmid-April.
The Standard & Poor's 500 index rose 4.15 to 1,212.58.
Tuesday's declines followed an early session rally on Oracle'snews that its U.S. outlook might be improving.
Analysts said those gains didn't last because they reflected theautomatic snapback that usually occurs after strong selling, ratherthan any shift in market sentiment.
Technology stocks have been battered in recent weeks by earningswarnings from companies including Nokia and Sun Microsystems.Oracle's projections weren't enough to convince Wall Street thatthe worst was over.
"Investors are not confident right now, and that's theproblem," Cripps said.
Oracle rose $1.92 to $16.76, a 13 percent increase, on slightlybetter-than-expected fiscal fourth-quarter results.
Winners and Losers
But the broader sector was choppier. Big losers of the sessionincluded Ciena, down $2.12 to $36.74, and Dow componentHewlett-Packard, off 71 cents at $26.
The Dow was also hurt by losses in Honeywell and GeneralElectric, after a top GE executive said there is zero chance its$41 billion acquisition of Honeywell will proceed because of stiffopposition from European regulators. Honeywell fell $1.50 to$38.50, while GE lost 13 cents to $48.87.
One bright spot on the market: financial stocks, which werelifted by gains in issues including Citigroup, up 96 cents at$50.75.
The market's malaise looks likely to continue through at leastthe summer. Although the Federal Reserve is expected to lowerinterest rates for the sixth time this year when it meets nextweek, most market experts doubt it will have much, if any, effecton stocks.
Rather, they say, investors are more focused on companies'profit outlooks. The huge stock rally this spring came on hopesthat a business turnaround would occur by year's end. Those hopesare rapidly fading amid poor earnings news and weak economic data.
"The conventional wisdom is that six months after the beginningof a rate cut cycle, we should start seeing benefits. But it's beenfive solid months since the Fed began cutting rates, and we're notseeing that," said Brian Belski, fundamental market strategist atUS Bancorp Piper Jaffray.
"Instead, the market has received a reality check in terms offundamentals and what it looks like for growth in tech over nextcouple of quarters. Business clearly has not turned positive yet."
Also today, a new Commerce Department report showed newhousing construction starts fell 0.4 percent in May to a seasonallyadjusted annual rate of 1.62 million. The drop was smaller thanmany analysts were predicting and left housing starts at a stillhealthy level.
The Russell 2000 index fell 1.80 to 488.73.
Advancing issues traded nearly evenly with decliners on the NewYork Stock Exchange. Volume came to 1.17 billion shares, comparedwith the nearly 1.10 billion shares Monday.
Overseas, Japan's Nikkei stock average fell nearly 1.0 percent.European shares fared better. Germany's DAX index advanced 0.9percent, Britain's FT-SE 100 gained nearly 0.2 percent, andFrance's CAC-40 was up 0.8 percent.
The tech-packed Nasdaq index fell 39.80 points, or 1.96percent, to 1,988.63, closing below 2,000 for the first time intwo months. The Nasdaq's drop marked a seven-day losing streakthat last occurred over the period ended Dec. 20, 2000,according to MarketHistory.com.
Blue chips gained on Monday, though. The Dow Jonesindustrial average rose 21.74 points, or 0.2 percent, toend at 10,645.38. The broader Standard & Poor's 500 Index fell 5.93 points, or 0.49 percent, to 1,208.43.
The Associated Press and Reuters contributed to this report