- NEW YORK (Reuters) - Stocks
sagged to 6-week lows on Wednesday as bleak forecasts from No. 2 U.S. bank
J.P. Morgan Chase & Co. Inc. JPM.N and software maker Oracle Corp.
ORCL.O sparked weakness in a market worried about the outlook for corporate
profits.
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- "Those are bellwether companies. They will certainly
create domino effects within their industry groups," said Richard
Cripps, chief market strategist at Legg Mason Wood Walker.
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- Investors are on edge as earnings warning season -- when
companies warn they will miss expectations -- heats up. Fears of a second
Gulf War are also dogging stocks, even after Iraq's agreement to admit
U.N. weapons inspectors. Defense Secretary Donald Rumsfeld on Wednesday
pressed Congress for immediate support for a possible U.S. strike against
Iraq.
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- "This quarter's earnings may not come in as expected,"
said Thomas Garcia, who helps manage $2.5 billion at Thornburg Investment
Management. "People thought the bottom was last quarter, but we may
not have gotten there." In addition, he said, "you've still got
people wondering if we're going into Iraq, even if they said they'd let
us in for inspections."
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- Stock gauges briefly rallied in late trading as some
investors took advantage of lower prices, but shares fell back into negative
territory at the close.
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- The Dow Jones industrial average .DJI closed down 35.10
points, or 0.43 percent, at 8,172.45, according to the latest available
figures. The average racked up its lowest close since Aug. 5.
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- The technology-laced Nasdaq Composite Index .IXIC was
down 7.81 points, or 0.62 percent, at 1,252.13. The broader Standard &
Poor's 500 Index .SPX was down 4.06 points, or 0.46 percent, at 869.46,
its lowest close since Aug. 5.
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- Losers outnumbered winners by a ratio of 5 to 3 on the
New York Stock Exchange and on Nasdaq. Trading was active, with more than
1.49 billion shares changing hands on the Big Board and more than 1.56
billion exchanged on Nasdaq.
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- J.P. Morgan was the most-active NYSE stock, trading more
than 36 million shares and tumbling 5.2 percent after the investment bank
warned its third-quarter earnings would land below second-quarter levels
as weak trading results and bad loans hurt profits. Shares fell $1.11 to
$20.44 and cast a pall over the financial sector.
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- Citigroup Inc. C.N fell 71 cents to $29.11, Goldman Sachs
Group GS.N dropped 46 cents to $70.41, Merrill Lynch & Co. MER.N lost
31 cents to $35.51 and Banc of America Corp. BAC.N sagged $1.75 to $66.30.
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- Oracle fell 71 cents, or 7.9 percent, to $8.32 after
the world's No. 2 software company posted a 33 percent drop in first-quarter
net profit and guided sales and profit forecasts to the low end of estimates,
as sales flagged in Japan and Europe.
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- Candy maker Hershey Foods Corp. HSY.N tumbled 12 percent,
or $8.81 to $65 after ending its controversial search for a buyer. Controlling
shareholder the Hershey Trust Co. rejected two bids -- the higher one for
more than $12 billion, from Wm. Wrigley Jr. Co. WWY.N -- and took the chocolate
giant off the auction block.
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- Cisco Systems Inc., the largest maker of equipment that
directs Internet traffic, fell 25 cents to $12.29 after saying in a filing
its order backlog has fallen 30 percent over the past year, raising concerns
among analysts that the company may not meet revenue expectations in the
current quarter.
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- On a brighter note, Abbott Laboratories Inc. ABT.N climbed
$1.83 to $40.42 after Merrill Lynch raised its investment rating on the
drugmaker to "buy" from "neutral," saying the company's
experimental arthritis drug D2E7 could gain U.S. approval earlier than
expected.
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- Japanese shares traded in the United States climbed after
the Bank of Japan said it would take the unprecedented step of buying shares
directly from banks, allowing them to reduce their vulnerability to market
fluctuations. Analysts said the move would place a floor under stock prices,
at least in the short term.
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- Japanese electronics parts maker Kyocera Corp. KYO.N
rallied $4.74 to $72.60. Car maker Toyota Motor Corp. TM.N jumped $3.22
to $53.13. Electronics giant Hitachi Ltd. HIT.N tacked on a $2.43 gain
to $54.13.
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- Airline stocks ranked among the biggest losers after
Merrill Lynch cut investment ratings on Continental Airlines Inc. CAL.N
, Delta Air Lines Inc. DAL.N , and Northwest Airlines Corp. NWAC.O to "neutral"
from "buy," saying it does not expect the airline industry to
return to profitability until 2004.
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- Continental sank $1.24 to $6.79. Delta fell $1.47 to
$12.77. Northwest dropped 66 cents to $7.69.
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- Drug research equipment maker Harvard Bioscience Inc.
HBIO.O plunged $2.53, or 53 percent, to $2.25 and ranked as the largest
percentage loser on the Nasdaq. The company warned third-quarter earnings
will be flat due to slower-than-expected adoption of new technology and
weak international sales.
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- The stock market slump has erased $7.9 trillion in market
value since its peak in March 2000, according to market research firm Wilshire
Associates.
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- Technicians noted that support -- where buyers are expected
to swoop in -- is at 1,225 for the Nasdaq, 8,000 for the Dow and 855 for
the S&P 500, according to research firm Schaeffer's Investment Research.
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- Resistance -- the point where sellers are likely to emerge
-- is at 1,265 for the Nasdaq, 8,300 for the Dow and 880 for the S&P.
The levels are key elements of technical analysis, which studies prices,
volume and charts.
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