Stocks Mixed As Investors Weigh Earnings

07.29.2004
Associated Press

Blue chips slumped Thursday, pressured by General Motors Corp., but other stocks were generally higher as investors focused on strong earnings and brushed off high oil prices.

The equity markets have been stuck in a tight trading range for more than a month, amid growing nervousness about slower second-half growth and the potential for terror attacks ahead of the presidential election and the Olympics. Having factored in higher fuel prices, the market was attempting to stay in positive range, but few analysts believed there was much conviction in the day's buying.

"We haven't had much of a follow-through today. I imagine it won't be long before we retest the lows," said David Hegarty, head trader at Commerzbank Securities. "To make us go higher from here ... we're going to have to have some sort of chatter, some sort of guidance for '05 that things will look better."

In afternoon trading, the Dow Jones industrial average was down 21.24, or 0.2 percent, at 10,095.83.

The broader gauges were higher. The Nasdaq composite index, rebounding from a loss Wednesday, added 11.22, or 0.6 percent, to 1,869.48. The Standard & Poor's 500 index gained 1.71, or 0.2 percent, to 1,097.13.

In economic news, the Labor Department reported a moderate 0.9 percent rise in wages and benefits for U.S. workers in the April-June quarter, down slightly from the previous quarter's increase. In a second report, the department said new claims for unemployment benefits edged up slightly last week, though they remain at a level that suggests continued labor market improvement.

Climbing crude prices added to the market's uneasiness, as they headed back toward Wednesday's record high. Down substantially earlier in the session, September crude futures were off only 5 cents at $42.85 on the New York Mercantile Exchange, largely propelled by a dispute between Russian oil giant Yukos and Moscow.

Even though most companies in the S&P 500 have reported better than expected earnings for the second quarter, lower forecasts have unnerved investors. Analysts say investors looking for growth will have to hone in on parts of the market that are poised to do well in the future, such as energy, materials and some parts of the technology sector.

"We are getting into a situation where we can expect a deceleration of earnings," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "Investors will have to focus on those pockets of growth that do exist, rather than hoping for broad market growth for outperformance ... which had worked into last year."

General Motors was down 3.5 percent, or $1.53, at $42.59, after analysts with Goldman Sachs and Lehman Brothers downgraded their rating on the stock, amid worries about inventory buildup and a pending accounting rule change that could dent earnings.

MetLife Inc. added $1.01 to $35.31 after reporting a 45 percent gain in second quarter profits, soaring past Wall Street's forecasts, as higher premiums and profitable investments helped boost revenues across all business segments. The company also disclosed that the Internal Revenue Service is auditing its returns for the years 1997-1999.

Exxon Mobil Corp. was up 22 cents at $46.03, after matching Wall Street's earnings estimates, reporting a 39 percent jump in profits on higher prices for oil and natural gas.

Krispy Kreme Doughnuts Inc. was down 15 percent, or $2.88, at $15.78, after disclosing it is the subject of an "informal, nonpublic inquiry" by the Securities and Exchange Commission. The probe is focused on the company's franchise reacquisitions and its guidance on a reduction in earnings, Krispy Kreme said.

Advancers outnumbered declining issues by more than 2 to 1 on the New York Stock Exchange. Volume came to 928.65 million shares, compared to 931.56 million shares traded at the same point Wednesday.

The Russell 2000 index, which tracks smaller company stocks, was up 2.86, or 0.5 percent, at 544.06.

Overseas, Japan's Nikkei stock average finished 0.8 percent lower Thursday. In Europe, France's CAC-40 added 1.9 percent, Britain's FTSE 100 gained 1.4 percent and Germany's DAX index closed up 2.2 percent.

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