Investors disappointed with lower-than-expected earnings from Amazon.com and low productivity gains from U.S. workers pushed stocks lower...
NEW YORK — Investors disappointed with lower-than-expected earnings from Amazon.com and low productivity gains from U.S. workers pushed stocks lower yesterday, ending Wall Street’s three-day string of gains.
The losses, for the most part, were minimal — an encouraging sign after a difficult January — and analysts said most investors simply sat out of trading while waiting for today’s job-creation report from the Labor Department, a key barometer of economic activity. However, Seattle-based Amazon’s earnings dragged tech stocks down significantly.
“Today’s trading is overwhelmed by Amazon.com,” said Arthur Hogan, chief market analyst at Jefferies.
Shares of the online retailer tumbled $6.13, or 14.64 percent, to $35.75 after the company late Wednesday reported a 26 percent jump in sales, excluding the effect of the weak dollar, but fell short of Wall Street earnings expectations by 5 cents a share.
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The Dow Jones industrial average fell 3.69 to 10,593.10.
Microsoft, one of the 30 Dow stocks, fell 28 cents to $26.18. Boeing, also a Dow stock, fell 23 cents to $52.00.
Broader stock indicators also lost ground. The Standard & Poor’s 500 index was down 3.30 to 1,189.89, while the tech-focused Nasdaq composite index dropped 17.42 to 2,057.64.
Starbucks stock was hit after reporting Wednesday that sales at shops open at least a year rose 7 percent in January, but analysts surveyed by Thomson First Call had expected the company to post slightly higher growth. Shares of the Seattle coffee-shop chain skidded $4.43, or 8.2 percent, to $49.57.
Most major corporations have reported fourth-quarter earnings, which means the market will be turning to economic indicators for guidance. The government’s employment report will be “the biggest thing all week,” Hogan said. Analysts expect about 200,000 workers were added to the rolls in January.
In economic news, the Labor Department reported that productivity, or output per worker, rose at an annual rate of 0.8 percent in the last three months of 2004. It was the smallest quarterly increase in almost three years.
The report could indicate that companies are unable to increase productivity as fast as they have in recent years, forcing them to hire more workers if they want to boost output.
The Institute for Supply Management said its index of the service sector came in at 59.2 for January, down from 63.9 in the previous month and lower than expectations.
Readings above 50 indicate growth in the sector, which makes up about two-thirds of U.S. economic activity.
Philip Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis, said the day’s news was not too dismal in the context of an otherwise fairly strong economy.
“It’s hard to cast the news we’ve seen recently with regards to the economy and earnings as negative,” he said.