NEW YORK – Stocks fell Wednesday as investors sifted through disappointing earnings reports from the likes of JPMorgan Chase and Pfizer that stoked concerns about profits and offset a batch of positive economic data.
The Dow Jones industrial average (search) was down 88.82 points, or 0.84 percent, to end at 10,539.97, with 27 of the 30 Dow components closing lower. The Standard & Poor's 500 Index (search) was down 11.35 points, or 0.95 percent, to finish at 1,184.63. The technology-laced Nasdaq Composite Index (search) was down 32.45 points, or 1.54 percent, to close at 2,073.59.
Online marketplace eBay Inc. (EBAY) plummeted 10 percent after hours to $93.09 from $103.05, its Nasdaq close, after reporting earnings that missed Wall Street's forecast.
"I think investors are just used to eBay beating the Street numbers — not just by a little, but by a lot," said Stephen Leeb, president of Leeb Capital Management. "The eBay earnings will hit every other major Internet stock."
In another disappointment after the closing bell, Qualcomm Inc. (QCOM) fell to $38.61 from its Nasdaq close at $41.07 after the wireless technology company gave a second-quarter earnings forecast that was below some analysts' estimates. Qualcomm, however, reported a higher profit for its fiscal first quarter on strong demand.
"Earnings have been the backbone of the market and investors are extrapolating the disappointing results and are worried," said Milton Ezrati, senior economic strategist at Lord Abbett & Co.
Motorola (MOT), an S&P 500 component, tumbled 7 percent, or $1.23, to $16.20, a day after it said first-quarter earnings would be lower than average Wall Street analysts' estimates. Meanwhile, shares of Dow component JPMorgan Chase & Co. (JPM) the No. 2 U.S. bank, nudged 22 cents lower to $38.19 after its fourth-quarter earnings missed Wall Street expectations.
"I think the market is suffering from the fears of a possible hawkish Federal Reserve going forward," said Peter Cardillo, chief strategist at S.W. Bach & Co., who noted that other concerns have also been baked into the market, including lofty oil prices ahead of what could be a problematic election in Iraq on Jan. 30. "There are several fear factors overshadowing the earnings season."
Inflation rose at the fastest pace since 2000 last year as a surge in fuel bills sent the Consumer Price Index (search) climbing 3.3 percent, the Labor Department (search) reported. Consumer prices rose just 1.9 percent in 2003. There could be some relief ahead, however; lower energy prices in December led to a 0.1 percent drop in retail prices. Economists hope that 2005 will turn out to be a calmer year on the energy front.
In other economic news, the Commerce Department reported residential construction rose for a fourth straight year following a jump in construction of new homes in December.
Separately, the Labor Department (search) announced new claims for unemployment benefits fell last week by the largest amount in more than three years, easing concerns raised by layoffs over the previous two weeks.
General Motors Corp. (GM) lost 6 cents to $36.71 after the world's biggest automaker reported lower profits compared to the year-ago period, due in part to continuing struggles at its European operations.
Pfizer Inc. (PFE), the world's largest drug company, declined 42 cents to $24.88 after reporting that its net income more than quadrupled during the fourth quarter, driven by strong sales of cholesterol drug Lipitor. Earnings still missed analysts' forecasts after charges.
International Business Machines Corp. (IBM), which announced profits that beat expectations after the close Tuesday, was down $1.80 at $93.10. Revenues also topped forecasts, as IBM posted strong overseas sales on the back of a weak dollar. IBM's outlook for 2005 was positive, but company officials said retirement expenses would be higher than expected due to the currency impact.
On the Nasdaq market, Yahoo Inc. (YHOO) was down 73 cents at $36.45 after the company nearly tripled its fourth-quarter profits thanks to brisk online advertising. Both earnings and revenues topped Wall Street expectations, and executives raised the company's outlook for 2005.
Trading was active, with 1.5 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 2.23 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
The number of declining stocks outnumbered those rising by about 2-to-1 on the NYSE and more than 2-to-1 on Nasdaq.
The Russell 2000 index, which tracks smaller company stocks, was down 6.96, or 1.11 percent, at 617.91.
Overseas, Japan's Nikkei stock average shed 0.16 percent. In Europe, France's CAC-40 lost 0.16 percent, Britain's FTSE 100 fell 0.12 percent and Germany's DAX index was down 0.12 percent.
Reuters and the Associated Press contributed to this report.