NEW YORK – Stocks tumbled to 12-week lows on Tuesday amid increasing nervousness about the outlook for second-quarter earnings. Grim news from retailers and dismal comments from Corning Inc., the world's No. 1 fiber-optic cable maker, didn't improve investors' mood.
Wall Street is bracing for almost 300 financial reports this week and 1,500 next week as the quarterly earnings second-quarter reporting season gathers steam, according to research firm Thomson Financial/First Call.
The Dow Jones industrial average tumbled 123.76 points, or 1.2 percent, to 10,175.64, its lowest close since April 16. The Nasdaq Composite Index lost 63.92 points, or 3.15 percent, to end at 1,962.79, its lowest close since April 17.
The broader Standard & Poor's 500 Index slipped 17.26 points, or 1.44 percent, to finish at 1,181.52, its lowest close since April 16.
``There are short-term problems with the market because second-quarter earnings reports just aren't going to be pretty,'' said Alan Kral, a portfolio manager with Trevor Stewart Burton & Jacobsen Inc., which oversees $750 million. ''Corning certainly isn't helping the situation.''
Corning Inc. shed 98 cents to $14.12. The world's No. 1 fiber-optic cable maker cut jobs, close plants and is taking $5.1 billion in charges amid a telecom slump that could last another 12 to 18 months. The company said its results before charges will top estimates in the second quarter, but will lag forecasts for the rest of the year.
``Corning certainly didn't give people confidence that we've seen the lows yet,'' said Robert Cohen, a trader with Credit Suisse First Boston. ``After last week, there's no reason to get aggressive on the market''
Other fiber optic-related stocks slumped, including JDS Uniphase, which lost 95 cents to $10.79, and Ciena Corp., which dropped $2.92 to $29.32.
Lucent Technologies Inc. fell 34 cents, or 5.35 percent, to $6.01 after the struggling telecommunications equipment giant said it plans to restructure its businesses into two major segments -- wireline and wireless -- over the next few weeks to help rebuild sales.
Discount clothing retailer Factory 2-U Stores Inc. plunged $10.74 to $20 after saying sales fell 5.5 percent in June, and it expects earnings to be lower than Wall Street expectations because of the slowing economy.
Linens 'N Things Inc. lost $3 to $23.20. The Wall Street house Credit Suisse First Boston cut its investment rating on the stock. The home fashions retailer warned earnings would fall below forecasts due to a soft economy.
Xerox Corp. shed 14 cents to $8.94. The office equipment maker eliminated its quarterly dividend for the first time since its inception in 1948 in a cost-cutting move to help the company returning to profitability this year.
A large merger between two energy companies also grabbed the spotlight. Amerada Hess Corp. will buy Triton Energy Ltd. for $2.7 billion in cash, raising its profile in the ranks of global integrated oil companies. Triton jumped $14.55 to $44.45, but Amerada Hess lost $1.36 to $78.
Genentech Inc. sank $8.26 to $43.85. Switzerland's Novartis AG said the asthma drug it is developing with Genentech hit a regulatory hurdle when the U.S. Food and Drug Administration requested more data on the drug.
The two drug companies plan to pay a royalty to the drug's creator, Tanox Inc., a small biotechnology company that saw its shares plummet $11.16 to $14.20, making it the biggest percentage loser on the Nasdaq.
Not all the news was gloomy, though. TiVo Inc., a provider of personal television recording services, jumped $1.81 to $6.88 after hinting its quarterly results would match forecasts.
Dow component AT&T Corp. rose $1.94 to $20.64 and was the most active on the New York Stock Exchange for the second straight session, after the telephone giant received an unsolicited $44.5 billion bid over the weekend from cable company Comcast Corp for its broadband unit. Comcast slipped 39 cents to $38.91.
Home Depot Inc. perked 16 cents to $46.15 and offered support to the Dow. Wall Street house Lehman Brothers hiked his investment rating on the No. 3 U.S. retailer, citing expectations for growth in same-store sales in the second half of the year.
Among economic news, Instinet Research said its Redbook Retail Sales Average posted a 1.3 percent drop in the five retail weeks of June, compared with a target for a decline of 1.2 percent. The average, which marks U.S. retail sales at discount, chain and department stores, was mostly unchanged in the latest week.
Sales during the July Fourth holiday were ``disappointing'' as a slowing economy, the volatile stock market and higher energy costs kept many shoppers away from stores, Redbook said.
Another report showed inventories on U.S. wholesalers' shelves rose in May as stockpiles of nondurable items such as clothing, groceries and pharmaceuticals increased, the government said.
Wholesale inventories rose 0.2 percent, the biggest monthly gain since November of last year, the Commerce Department said. The increase exceeded expectations. A group of economists polled by Reuters forecast, on average, that wholesale inventories would be unchanged in May.
Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to 1.24 billion issues, compared with 1.04 billion Monday.
The Russell 2000 index fell 7.84 to 478.14.
Overseas, Japan's Nikkei stock average rose 0.5 percent. Germany's DAX index slid 0.9 percent, Britain's FT-SE 100 was virtually unchanged, and France's CAC-40 fell 1.1 percent.
-- Reuters and the Associated Press contributed to this report.
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