Dow Jones drops 143 points

Wall Street looked askance at earnings reports yesterday, with investors bidding stocks sharply lower despite healthy profits at companies such as 3M and Ford.

The Dow Jones industrials slid more than 143 points, giving the blue chips a drop of nearly 400 points over four losing trading sessions.

Analysts said a spate of disappointing corporate outlooks last week along with ongoing fears of war with Iraq caused investors to be sceptical of better-than-expected earnings.

Concerns about war increased after news that a gunman in Kuwait opened fire on a vehicle carrying American civilians, killing one and wounding another.

The US Embassy called it a terrorist act.

“Despite the (earnings) data – and we have had some favourable data – this market is still focused on talk of war, the probability of war and the effects of war and much of that was exacerbated by the fatal shooting in Kuwait,” said Alan Ackerman, executive vice president at Fahnestock & Co.

The Dow Jones industrial average closed down 143.84, or 1.3%, at 8,442.90. The Dow has dropped 399.72, or 4.5%, since last Wednesday.

The broader market also retreated for the fourth day in a row.

The Nasdaq composite index fell 11.93, or 0.9%, to 1,364.25, following a weekly decline of 4.9%.

The Standard & Poor’s 500 index fell 14.16, or 1.6%, to 887.62, having dropped 2.8%.

The market was closed on Monday for the Martin Luther King holiday.

Investors were trading cautiously today, awaiting fourth-quarter results and corporate outlooks in what is likely to be the busiest week in the earnings reporting season.

Among today’s losers, Merrill Lynch fell 1.15 to €40.08 and JP Morgan Chase declined 77 cents to €25.42 ahead of earnings due out tomorrow.

Companies that exceeded expectations last week but issued cautious forecasts traded lower again today.

IBM fell 76 cents to €80.54 and Intel declined 5 cents to €16.29, having said last week that it was reducing capital spending by roughly €1bn this year.

“The good news is companies are beating expectations. But the bad news is the next six months are going to be a difficult task and they see no change in that,” Riley said.

Keeping meagre corporate outlooks in mind, investors sold Ford 2 cents lower to €10.14, although the company posted earnings today that surpassed analysts’ expectations by a penny a share and CEO Bill Ford reiterated that he expects the company to report full-year earnings of 70 cents a share, which is well ahead of most Wall Street forecasts.

And 3M declined 68 cents to 125.64 despite also exceeding earnings expectations by a penny a share.

The market’s losses also came despite better-than-expected news on housing construction.

The Commerce Department reported construction of news homes rose by 5% in December, surprising analysts who had anticipated no change.

Declining issues outnumbered advancers nearly 3 to 1 on the New York Stock Exchange where trading volume was light.

The Russell 2000 index, which tracks smaller company stocks, fell 4.93, or 1.3%, to 383.17.