US stocks lose fizz amid Coca-Cola gloom

Stocks sagged on Wall Street today after Coca-Cola and several other companies issued gloomy forecasts, and lower-than-expected figures on industrial production for August threw the broader US economic outlook into question.

Adding pressure to technology shares, Goldman Sachs lowered its ratings on both hardware and software stocks based on its latest survey of corporate officers who oversee high-tech spending.

With corporate forecasts falling short of expectations and a number of signals pointing to more modest capital spending, worries about a slower second half were intensifying, but analysts say it’s too soon to tell what lies ahead.

“We’ve been saying for a while that investors need to be much more selective ... this is a stock-picking kind of market,” said John Caldwell, chief investment strategist for McDonald Financial Group.

“It may be that Coke’s problems are just Coke’s problems. On the flip side of that, there are a number of companies out there that are saying relatively good things.”

The Dow Jones industrial average slid 86.80, or 0.8%, to 10,231.36.

The other gauges were also lower. The Nasdaq composite index slumped 18.88, or 1%, to 1,896.52. The Standard & Poor’s 500 index lost 7.96, or 0.7%, to 1,120.37.

The Federal Reserve reported only a 0.1% rise in industrial production in August, surprising economists who had forecast a 0.5% gain.

The feeble rise, which followed a robust 0.6% advance in July, suggested the US economy may still be working through the “soft patch” Federal Reserve Alan Greenspan referred to in remarks before Congress last week.

In addition to disheartening news on both the economic and corporate fronts, light trading ahead of the Jewish New Year contributed to the downward pressure on stocks.

Still, after more than a month of decent gains, analysts said it made sense for equities to take a pause on less-than-encouraging news.

Energy costs have also been a persistent worry for investors, and already uncomfortably high oil prices headed skyward this week as Hurricane Ivan menaced rigs, threw tankers off course and significantly cut daily production in the Gulf of Mexico.

Prices fell back as the storm took aim at the Alabama and Mississippi coasts tonight, and light, sweet crude for October delivery declined 81 cents to settle at 43.58 per barrel.

In an effort to quell anxiety about global crude supplies, the 11-nation Organisation of Petroleum Exporting Countries announced it would raise its target oil production by 1 million barrels a day later this year.

Many analysts dismissed this as a largely symbolic gesture, however, since the cartel is already pumping beyond the new quota.

Dow component Coca-Cola fell 4%, or 1.71, to 41.16, after warning that results for the second half of the year were likely to fall short of expectations due to weaker sales and challenging conditions in key markets.

Celestica sank 14%, or 1.97, to 12.60, after lowering its third-quarter forecast, citing a drop in orders from several top customers, which the manufacturer of electronics components declined to identify.

The Toronto-based company’s largest customers include such tech concerns as Cisco Systems, Lucent Technologies and IBM, and those stocks posted declines as well.

Cisco fell 79 cents to 19.56, Lucent shed 9 cents to 3.32, and IBM was down 35 cents at 86.37.

Also weighing on the sector was the Goldman survey, which found corporations lowering their projections on tech capital spending next year.

The investment bank reduced its ratings on the sector, cut earnings estimates for several companies and revised revenue targets on all but two hardware concerns – Dell and IBM. Dell was down 61 cents at 35.41.

There was some bright news – the leading US consumer electronics retailer, Best Buy, gained 4.6%, or 2.32, to close at 52.61, after reporting a nearly 8% increase in second-quarter earnings, helped by improved cost controls and margins. The results beat analysts’ estimates by a penny a share.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, was down 2.44, or 0.4%, at 568.52.