Stocks fell yesterday as Delphi's bankruptcy filing and lowered outlooks at Northrop Grumman and Xilinx set a gloomy tone on Wall Street...
NEW YORK — Stocks fell yesterday as Delphi’s bankruptcy filing and lowered outlooks at Northrop Grumman and Xilinx set a gloomy tone on Wall Street ahead of the upcoming third-quarter earnings season.
The Dow Jones industrial average lost 53.55 to 10,238.76, its lowest close since mid-May.
Microsoft, one of the 30 Dow stocks, fell 13 cents to close at $24.46 a share. Boeing, also a Dow stock, gained 60 cents to $67.90.
Broader stock indicators also fell. The Standard & Poor’s 500 index dropped 8.57 to 1,187.33, while the Nasdaq composite index sank 11.43 to 2,078.92.
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Volume was light as many traders took the Columbus Day holiday off. The U.S. government bond market also was closed for Columbus Day. The Treasury’s usual Monday auction of three-month and six-month bills will be held today.
The market extended last week’s losses as investors grew anxious for earnings reports to gauge the impact of hurricanes Katrina and Rita, and to get a glimpse of where the economy is headed as companies forecast future results. Stocks took a hit after Northrop said the storms would hurt its 2005 profit, while chip maker Xilinx pegged its sales below previous targets.
However, “this is the time when you get profit warnings instead of earnings surprises,” said John Forelli, portfolio manager at Independence Investments. “Once the reports start flying in next week, you typically get a lot of positive reinforcement from earnings.”
Oil prices eased slightly as traders weighed expectations for greater demand this winter against a report last week showing September consumption declined 3 percent in the face of record energy prices. A barrel of light crude slid 4 cents to $61.80 on the New York Mercantile Exchange.
Wall Street analysts predict double-digit earnings growth for the third quarter, although estimates have been pared back amid inflation concerns and fears of an economic downturn.
Rick Pendergraft, a trader at Schaeffer’s Investment Research, said he expects some companies will be conservative in projections for the future, given the widespread uncertainty. “Companies may be a little more cautious on their outlooks — not about the numbers they’re going to put out, but about making a strong statement,” Pendergraft said.