- NEW YORK (Reuters) - Stocks
sagged on Tuesday as a stream of profit warnings from companies including
fast food giant McDonald's Corp. and a surprise drop in industrial output
doused an early rally sparked by Iraq's agreement to admit weapons inspectors.
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- "Despite the fact that Iraq allowing in inspectors
will delay U.S. action, the market is back to basics -- back to analyzing
data and earnings pre-announcements," said Alan Ackerman, a market
strategist at Fahnestock and Co.
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- Stocks leapt more than 1 percent at the open after Iraq
agreed to readmit U.N. weapons inspectors without conditions. But the run-up
fizzled after the Bush administration expressed skepticism over Iraqi President
Saddam Hussein's offer and urged the United Nations and the U.S. Congress
to keep up pressure on Baghdad.
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- Grim U.S. economic data and corporate profit warnings
also swiveled back into the spotlight.
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- The Dow Jones industrial average was down 172.63 points,
or 2.06 percent, at 8,207.55, according to the latest available figures.
That is its lowest close since Aug. 5, when the average closed at 8,043.63.
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- The broader Standard & Poor's 500 Index was down
17.58 points, or 1.97 percent, at 873.52, its lowest close since Aug. 6.
The technology-laced Nasdaq Composite Index was down 15.94 points, or 1.25
percent, at 1,259.94.
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- "The market's real concern is earnings and that's
what it's going to take to get things going again," said Brian Finnerty,
who helps oversee $1.5 billion for Melhado Flynn & Associates. "We'll
be in choppy waters here until the middle of October when earnings come
out."
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- Losers outpaced winners by a ratio of 22 to 9 on the
New York Stock Exchange and 7 to 4 on Nasdaq. Trading was active, with
about 1.38 billion shares changing hands on the Big Board and more than
1.48 billion on Nasdaq.
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- McDonald's led the Dow lower, tumbling 12.8 percent,
or $2.78, to $18.91, after the world's largest restaurant chain cut its
2002 earnings expectations, citing lower-than-expected sales in the United
States and Europe.
-
- Other restaurant chain shares slid, including hamburger
chain Wendy's International , which dropped $1.79 to $30.83.
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- "McDonald's threw cold water on everyone and they're
having a hard time shaking it," said Finnerty.
-
- Grocery stocks tumbled after Kroger Co. , the No. 1 U.S.
supermarket chain, posted a lower-than-expected quarterly profit and cut
its earnings growth forecast for the year due to penny-pinching shoppers
and pressure from competitors like discounter Wal-Mart Stores Inc. .
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- Kroger shares dropped 12.5 percent, or $2.25, to $15.76.
Wal-Mart slipped 49 cents to $54.26.
-
- Drug wholesaler D&K Healthcare Resources Inc. heightened
earnings jitters after it cut its operating earnings-per-share outlook
for the current quarter because of lower sales, and withdrew its fiscal
year outlook. Shares plunged more than 60 percent, or $14.39, to $9.51.
-
- The latest economic data from the Federal Reserve showed
that U.S. industrial output posted an unexpected decline in August, raising
worries about the manufacturing sector's fragile rebound.
-
- "The industrial production numbers were weak,"
said Brian Pears, head of equity trading at Victory Capital Management.
"The data continues to confuse the puzzle. It seemed like the economy
was improving but it's not as strong as believed."
-
- Retail software stocks were lower a day after one of
the leading firms, JDA Software Group Inc. , warned that its third-quarter
sales and operating results would likely fall short of expectations due
to a slowdown in demand. JDA shares tumbled $4.68, or 37 percent, to $8.02.
-
- Business software maker Oracle Corp. declined 25 cents
to $9.03 ahead of its quarterly results reported after the close. After
markets closed, the world's second-biggest software company posted a lower
first-quarter profit amid lackluster corporate demand for software.
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- AmeriCredit Corp. tumbled $5.16, or 38 percent, to $8.46,
making shares of the auto finance company the biggest percentage decliners
on the NYSE. The company said it will issue $500 million of new stock and
change how it accounts for loans, moves which will likely cut into earnings.
-
- On a brighter note, Microchip Technology Inc. rallied
$1.64, or 11 percent, to $17. The company on Monday said it expects results
for its fiscal second quarter to exceed expectations, driven by higher
gross margins on its products.
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- Tuesday marked the one-year anniversary of the reopening
of stock markets after the Sept. 11 attacks on the United States forced
trading to halt for four days.
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- Since that time, the S&P 500 fallen about 17 percent,
and the Nasdaq has dropped about 20 percent.
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- Stocks are on track to rack up their third-straight declining
year -- the first time investors have seen such a stretch since 1941.
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- "The economy is one catalyst, another is earnings.
Then there's the Iraq situation and corporate spending," said Todd
Leone, head of listed trading for SG Cowen Securities Inc.
-
- (With additional reporting by Haitham Haddadin)
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