Wall Street suffered a sharp reversal yesterday, with the Dow Jones industrials dropping 133 points as concerns over corporate profits and...
NEW YORK — Wall Street suffered a sharp reversal yesterday, with the Dow Jones industrials dropping 133 points as concerns over corporate profits and economic growth reasserted themselves.
The Dow fell 133.03 to 10,281.10 after gaining 128 points Wednesday.
Microsoft, one of the 30 Dow stocks, declined 30 cents to close at $24.79 a share. Boeing, also a Dow stock, fell $1.07 to $67.30.
Broader stock indicators also pulled back. The Standard & Poor’s 500 index lost 17.96 to 1,177.80, and the Nasdaq composite index dropped 23.13 to 2,068.11.
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Wednesday’s rally proved short-lived as Pfizer withdrew its profit forecasts for 2006 and 2007, increasing investors’ worries about the vulnerability of corporate profits. Intel spurred such jitters earlier this week in lowering its forecast for sales of its computer chips.
Members of the Federal Reserve’s interest rate-setting committee also fed inflation concerns, leading investors to wonder whether a continued rise in interest rates would slow the economy too much and lead to more corporate profits shrinking.
“Yesterday was a pretty good up day, but we were well oversold, so we shouldn’t probably get too excited about that,” said Linda Duessel, market strategist at Federated Investors in Pittsburgh. “This is just the beginning of the heavy earnings results from the third quarter, and from everything we’re seeing so far, the results are pretty mixed, but guidance in general is kind of cautious for the fourth quarter.”
Oil prices fell sharply despite concerns about Hurricane Wilma, due to enter the Gulf of Mexico by the end of the week. A barrel of light crude settled at $61.03, down $1.38 on the New York Mercantile Exchange — a sharp drop, but one that had little effect on stocks.
“Energy prices really have fallen to a distant second as far as concerns for the market,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “The big concern is whether the Federal Reserve is going to keep raising interest rates and, if they do, whether that’s going to slow the economy too much.”
The Conference Board said its index of leading indicators, which attempts to forecast future growth, fell 0.7 percent for September, worse than the 0.5 percent drop expected by economists.