Wall Street: Tuesday close
NEW and old economy shares split in a glass half-empty/half-full debate over how bad things are economically.
The Dow Jones Industrial Average, which fell 63 points on Monday to break a three-day winning streak, slumped another 46.50 points or 0.46% to 10,150.55. The Nasdaq Index, off 1% on the first trading day of the week, marched higher by 18.64 points or 0.92% to 2,055.74.
The divergence between the two markets came on a series of profit and revenue announcements which ran the gamut from 'things were bad, but not as bad as expected' to rank disappointment. Analysts said the choppiness would probably continue for the next month as quarterly earnings reports drop on Wall Street.
Economic news was not encouraging, with the Commerce Department reporting that orders to US factory orders fell 3.3% in November after rising 7% in October. The latest data indicated the manufacturing sector, in a 17-month long slump, could be adding to the 1m. jobs already cut.
Aluminium giant Alcoa, always among the first major companies to report quarterly earnings, weighed on the Dow after it flagged its first quarterly loss since 1994. Alcoa shares slumped 82 cents or 2.2% to $37.34. AOL Time Warner dipped 68 cents or 2% to $32 as it painted a bleak picture of the outlook for its business and said it would book a charge of as much as $60bn. to cover market declines since its merger. Citigroup fell $1.89 or 3.7% to $49.50 as Merrill Lynch raised concerns about loans to Argentina.
Techs, which had been propelled by signs of an uptick in demand, battled to make headway in the face of conflicting signals. Computer maker and retailer Gateway issued a grim sales forecast and saw its shares plummet $2.56 or 25% to $7.696. UBS Warburg analyst Don Young downgraded the shares because due to the 'major revenue miss.' 'With an expense structure around 20% of revenues, we are not sure Gateway can compete,' wrote Young in reference to the downgrade. Gateway is locked in a struggle for market share with Dell and Compaq. Compaq, which made a more positive announcement earlier, dipped 39 cents or 3.3% to $11.29. Dell was slightly higher at $29.64. Microsoft rose 82 cents or 1.2% to $69.38 on a confident presentation by chairman Bill Gates at a consumer product show. Gates highlighted the company's sales of 1.5m. Xbox game consoles over the holiday shopping season. Intel was ahead 31 cents or 0.9% to $35.58. Oracle, Microsoft's biggest competitor, gained 26 cents or 1.7% to $15.75. Chipmaker Altera surged $1.02 or 4.3% to $24.92 said its sales were better than expected.
Tiffany, the upscale jeweller, won a broker upgrade or two when it said its profits would come in at the high end of expectations. Its shares leapt $1.95 or 5.9% to $34.84.
Airlines strengthened as Goldman Sachs said that traffic was coming back 'a bit faster than expected.' UAL jumped 85 cents or 5.7% to $15.90.
General Motors slipped 85 cents or 1.7% to $49.76 after it said it would offer early retirement to 5000 white collar workers to cut as much 10% of its workforce. Ford, which is expected to announce deep job cuts on Friday, was steady at $16.56. Financial services powerhouse Goldman Sachs wilted $3.25 or 3.4% to $93.50 as 14 million shares were sold below the market price by two major shareholders.
