Fall in US stocks

Stocks fell in the United States today as a gloomy tone was set on Wall Street by Delphi Corporation’s bankruptcy filing and lowered outlooks from Northrop Grumman and Xilinx.

The market extended last week’s losses as investors grew anxious for third-quarter earnings 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 hurricanes would hurt its 2005 profit, while chip maker Xilinx pegged its sales below previous targets.

“This is the time when you get profit warnings instead of earnings surprises,” said John Forelli, portfolio manager at Independence Investments LLC. “Once the reports start flying in next week, you typically get a lot of positive reinforcement from earnings.”

Wall Street had some early support from a 7.5 billion dollar acquisition in the insurance sector and a rating upgrade at International Business Machines. But the major indexes slipped into negative territory and widened their losses after each shedding more than 2% last week.

Volume was light as many traders took the Columbus Day holiday off. The Dow Jones industrial average lost 53.55, or 0.52%, to 10,238.76.

Broader stock indicators were also lower. The Standard & Poor’s 500 index dropped 8.57, or 0.72%, to 1,187.33, while the Nasdaq composite index sank 11.43, or 0.55%, to 2,078.92.

The US government bond market was closed today for the Columbus Day holiday. The dollar was mixed against other major currencies in European trading, and gold prices edged higher.

Oil prices eased slightly as traders weighed expectations for greater demand this winter against a report last week showing September consumption declined 3% in the face of record energy prices.

A barrel of light crude slid 4 cents to 61.80dollars on the New York Mercantile Exchange.

Wall Street analysts are predicting double-digit growth for the third quarter, although estimates have been pared back amid inflation concerns and fears of an economic downturn. More importantly, investors will be focused on companies’ expectations for the coming months while interest rates continue to rise and soaring oil and gas prices threaten consumer spending.

Rick Pendergraft, a trader at Schaeffer’s Investment Research, said he expects some companies will be conservative given the widespread uncertainty caused by the economic ripple left in the hurricanes’ wake.

“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.

Factors like the hurricanes’ impact and interest rates ”are going to prevent people from stepping up and making bold estimates.”

Meanwhile, investors are worried that high costs and energy prices – crude oil vaulted to more than 70dollars a barrel following Katrina – will eat into last quarter’s profit.

But aluminum producer Alcoa, which previously warned of a profit shortfall, reported late Monday that its earnings grew 2.1% despite lower aluminum prices, and beat analyst expectations by 4 cents a share. Investors were clearly relieved; Alcoa, which lost 38 cents to close at 22.66dollars in regular trading, was up 53 cents in after-hours activity.

Elsewhere, Monday’s revised forecasts pulled down Northrop Grumman by 57 cents to 53.48dollars, and Xilinx by 4.35dollars to 22.66dollars.

Delphi, the largest US auto supplier, on Saturday filed for bankruptcy after battling with soaring raw materials and labor costs. Delphi plunged 70.5% to 33 cents, and former parent General Motors Corp. lost 2.81dollars to 25.48dollars.

Insurer Lincoln National agreed to buy Jefferson-Pilot for 7.5 billion dollars in a deal creating one of the nation’s biggest life-insurance companies. Lincoln dropped 1.54dollars to 49.19dollars, while Jefferson added 3.2dollars to 53.81dollars.

IBM jumped 75 cents to 81.25dollars, after Citigroup raised the computer maker to “buy” from “hold.”

Declining issues outpaced advancers by 23 to 9 on the New York Stock Exchange, where volume of 1.64 billion shares topped the 1.61 billion shares traded at the same point on Friday.

The Russell 2000 index of smaller companies was down 6.36, or 0.99%, at 637.97.