Oct. 22, 2004
By MICHAEL J. MARTINEZ
News My Way
NEW YORK (AP) - Worried investors sent stocks sharply lower as crude oil futures topped $55 per barrel and tepid earnings from Microsoft Corp. and the Coca-Cola Co. offset Google Inc.'s strong third-quarter report. The Dow fell more than 101 points in late trading.
Oil prices continued to pressure the market, casting doubt not only on fourth-quarter earnings, but also on the health of the economy as a whole. A barrel of light crude was quoted at $55.17, up 70 cents, on the New York Mercantile Exchange.
"These oil prices are really going to bite the consumer at some point. Heating oil is up, it's supposed to be a very cold winter in the Northeast, and lower and middle income people are going to pay," said Russ Koesterich, U.S. equity strategist at State Street Corp. "Combine that with a total lack of fundamentals in the big name stocks, and there are very few places left to hide for investors."
Shares of Google surged in early trading as the online search giant doubled both revenues and profits from a year ago. Like its initial public offering two months ago, Google was one of the few bright spots in an otherwise nervous market.
In late afternoon trading, the Dow Jones industrial average fell 101.92, or 1 percent, to 9,763.84. The Dow was poised to set a new low for the year to date.
Broader stock indicators also were substantially lower. The Standard & Poor's 500 index was down 10.48, or 1 percent, at 1,096.01, and the Nasdaq composite index lost 36.72, or 1.9 percent, to 1,916.90.
All three major indexes were set to end lower for the third straight week, as the continued rise in oil prices and middling earnings reports sapped confidence from investors. A wait-and-see attitude also pervaded the market, with major economic reports, including the first reading of the third quarter's gross domestic product, and the presidential election looming.
Google's earnings impressed analysts, with Prudential raising the company's target stock price to $200 early Friday. Google skyrocketed $24.51, or 16.4 percent to $173.89, but other major technology stocks stole Google's momentum.
"You've got one darling here surrounded by a bunch of less-than-hopefuls, and that's not going to boost anything other than the darling," said Bryan Piskorowski, market analyst at Wachovia Securities. "With oil up and nobody really stepping out with earnings other than Google, we're sliding here."
Dow component Microsoft slipped 83 cents to $27.73 after beating Wall Street estimates by 2 cents per share before one-time charges. Analysts were concerned about a dropoff in long-term contract revenues, a possible sign that demand for the company's software was waning as companies waited for a long-delayed update of the Windows operating system.
Online retailer Amazon.com Inc. (AMZN) missed its third-quarter earnings forecasts by a penny per share, even as the company saw its profits triple from a year ago. A disappointing 2005 sales outlook further disappointed investors. Amazon.com tumbled $5.15 to $34.32.
Coca-Cola, also a Dow component, slid 50 cents to $38.98 after posting a 24 percent drop in quarterly profits on flat revenues. However, the soft-drink giant managed to beat reduced Wall Street estimates by 3 cents per share.
Fast-food operator Wendy's International Inc. (WEN) posted a 4 percent rise in its third-quarter profits, but issued a lower outlook for its full 2004 results. Wendy's was up $1 at $32.80.
Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 1.11 billion shares, compared with 1.29 billion at the same point Thursday.
The Russell 2000 index of smaller companies was down 7.24, or 1.3 percent, at 569.42.
Overseas, Japan's Nikkei stock average rose 0.63 percent. In afternoon trading, Britain's FTSE 100 closed down 0.04 percent, France's CAC-40 lost 0.01 percent for the session, and Germany's DAX index gained 0.03 percent in late trading.
---
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
http://apnews.myway.com/article/20041022/D85SLQJO0.html