NEW YORK (CNNfn) - U.S. stocks tumbled for the fourth time in five sessions Friday as the first trading week of the new year could not rid Wall Street of an old problem: profit worries.
Euphoria from a historic rally two days ago gave way to more concerns about earnings weakness when another round of companies warned about missing quarterly financial targets.
On Friday alone, at least 12 companies issued revenue and/or bottom line warnings, just days before thousands of companies start posting actual results for the last three months of 2000.
"We still are going to suffer," Chuck Hill, director of research at First Call told CNNfn's market coverage. "We are well on our way to a record quarter in terms of negative preannouncements."
 At the same time, the nation's labor market showed no surprise weakness last month, a government report showed Friday. That disappointed some investors who hoped a big hiring slowdown would lead to a large interest rate cut.
The Nasdaq composite index fell 159.18, or 6.20 percent, to 2,407.65, losing 2.5 percent on the week. The Dow Jones industrial average lost 250.40, or 2.9 percent, to 10,662.01 and fell 1.1 percent over the first four sessions of 2001. The S&P 500, which shed 1.6 percent on the week, lost 34.99 points, or 2.6 percent, to 1,298.35 on Friday.
Still, a huge rally Wednesday, when the Federal Reserve cut interest rates, saved the market from bigger weekly declines.
"It is difficult to pick the bottom of these markets," Nick Angilletta, global head of retail sales at Salomon Smith Barney, told CNNfn's market coverage. (394K WAV) (394K AIFF).
The Nasdaq last bottomed on Tuesday, the first trading day of 2001, when the index hit 2,291.86.
 More stocks fell than rose Friday. Declining issues on the New York Stock Exchange beat advancing ones 1,699 to 1,252 as 1.4 billion shares traded. Nasdaq losers topped winners 2,439 to 1,410. More than 2 billion shares changed hands.
In other markets, Treasury securities advanced. The dollar fell against the euro but rose versus the yen.
Warning, warning
More evidence emerged Friday that corporate profits are falling or, in some cases, losses are widening, as companies can't sell as many products or services as they did when the economy was more robust. Clothing and book retailers and an airline and medical device maker count among the latest casualties.
Nordstrom (JWN: Research, Estimates), the upscale retailer, warned that its fiscal fourth-quarter earnings per share would be in the range of 18 cents to 23 cents, well lower than the First Call consensus estimate of 38 cents. The company's stock fell $1.50 to $18.88.
Delta Air Lines (DAL: Research, Estimates) gained 25 cents to $52.75 after it said profit for the most recent quarter would be 55-to-65 cents a share -- well below Wall Street forecasts of 81 cents a share -- due to heavy flight cancellations from labor problems and inclement weather.
Click here for a comprehensive look at recent warnings
Guidant (GDT: Research, Estimates), a maker of medical devices, tumbled $3.63 to $47.69. The company said revenue in the current quarter will come up short.
Expectations for a 10 percent earnings shortfall sent shares of Borders Group (BGP: Research, Estimates), the bookseller, down 94 cents to $12.
Among Dow issues, Minnesota Mining & Manufacturing (MMM: Research, Estimates) was the biggest loser, falling $4.44 to $114.56 after Lehman Brothers cut its 2001 earnings estimate on the diversified manufacturer.
 Financial stocks also fell amid rumors that Bank of America experienced significant losses from bad loans or other trading activities. Bank of America (BAC: Research, Estimates), which refuted the rumors, fell $3.75 to $47.75.
American Express (AXP: Research, Estimates) declined $2.63 to $51.56 while Chase J.P. Morgan (JPM: Research, Estimates) shed $3.06 to $48.94.
On the Nasdaq, Cisco Systems (CSCO: Research, Estimates) tumbled $5.25 to $36.63 after rallying earlier in the week. Sun Microsystems (SUNW: Research, Estimates), which soared more than 20 percent Wednesday, lost $3 to $28.
"We've had tremendous moves -- and after you have explosive moves, it's not unusual for markets to pull back on profit taking," Bernadette Murphy, market analyst at Kimelman & Baird, told CNNfn's Market Call.
The Nasdaq surged more than 14 percent Wednesday.
Andrew Barrett, technology analyst at Salomon Smith Barney said he does not expect stocks to rally any time soon.
"It's going to take a turnaround in the earnings picture," Barrett said. "I think the upside begins when we get our next rate cut."
Jobs data an afterthought
In the week's most closely watched economic indicator, the Labor Department's job report showed the unemployment rate held steady at 4 percent. Wall Street expected a slight rise. The U.S. economy created 105,000 jobs in December, just below forecasts. Average hourly earnings inched above expectations.
But Mike Moran, economist at Daiwa Securities, said the report masks weakness in the jobs market. Most of the payroll gains were not private sector jobs but government positions, which dropped in November.
Manufacturers cut 62,000 jobs from their payrolls.
Still, some on Wall Street were hoping for to see more weakness in the report, giving the Federal Reserve a reason to cut interest rates by half a percentage point at its two-day meeting later this month.
"Low unemployment may limit the next move (to a quarter-percentage point rate cut), but another rate cut at the January 31 meeting is likely," Moran said.
The latest jobs figures come two days after the Fed lowered borrowing costs by half a percentage point to jolt the economy. The central bank made a further change in monetary policy late Thursday, pruning the rate it charges banks for emergency loans.
While the nation's unemployment rate held steady last month, there's plenty of evidence that the labor market's best days are behind it.
Challenger Gray and Christmas Inc., the outplacement firm and jobs consultancy, said the number of job cuts tripled in December from the previous month as U.S. employers slashed 133,713 positions.
eToys (ETYS: Research, Estimates), the online toy retailer, said Thursday it will eliminate 70 percent of its 1,000 workers. Its stock, which traded as high as $80 in 1999, was unchanged at 16 cents. 
|
