NEW YORK – Wall Street retreated Thursday as mixed earnings news and rising oil prices prompted investors to take profits from a sharp rally in the prior session. A disappointing forecast from Intel Corp. (INTC) dragged on the Nasdaq composite index.
At the close, the Dow declined 83.32, or 0.76 percent, to 10,928.10.
Broader stock indicators also fell sharply. The Standard & Poor's 500 index dropped 10.68, or 0.85 percent, to 1,249.13, and the technology-laden Nasdaq lost 41.29, or 1.98 percent, to 2,039.42.
Better-than-expected results from Apple Computer Inc. (AAPL) and Motorola Inc. (MOT) countered a hefty loss at Ford Motor (F) Co. But investors worried about a slowdown in tech spending were rattled by a steep earnings drop at Intel, which gave no indications that conditions would improve in the second half of the year.
Coupled with anxiety about political unrest in the Middle East, the blend of earnings data dampened the market's cheer over signals that the Federal Reserve may be near an end to its string of interest rate hikes. On Wednesday, the Dow Jones industrials surged 212 points after Fed Chairman Ben Bernanke said the economy was moderating and inflation was contained.
Although Bernanke reiterated his comments Thursday, the pullback reflected fear that high oil prices could fuel inflation and cause the Fed to keep boosting rates. Minutes from the Fed's June meeting added pressure on stocks late in the day, with the central bank saying there is still significant uncertainty about future rate hikes.
"From a fundamental perspective, with mixed earnings and positive news from the Fed, this would qualify as somewhat of an aimless market," said Chris Johnson, manager of quantitative analysis for Schaeffer's Investment Research. "Technicals will give a good bit of direction to a market that's otherwise directionless."
Bonds extended their advance, with the yield on the 10-year Treasury note falling to 5.02 percent from 5.06 percent late Wednesday. The U.S dollar was flat against other major currencies; gold prices dipped to about $630 an ounce.
Oil prices bounced back from three days of declines driven by profit taking and an unexpected rise in U.S. reserves reported Wednesday. A barrel of light crude gained 42 cents to settle at $73.08 on the New York Mercantile Exchange.
Wall Street recently has been stymied by an unrelenting wave of negative headlines, giving investors few reasons to put money in the market. Political tension in the Middle East and North Korea catapulted oil prices to record highs; a handful of downbeat earnings reports raised questions about the strain of higher lending costs on economic growth.
While Bernanke's congressional testimony soothed some concerns about the economy, he acknowledged the challenge of pegging interest rates at a level that balances growth and inflation. Regardless, analysts say the economy appears sound and that stocks' recent skittishness is simply reflective of the market's short-term focus.
"I think overall everything looks to be in good shape," said Bill Groenveld, head trader for vFinance Investments, who also noted the low summertime trading volume. "Especially at the levels we're trading at, people are going to have to step back in based on value."
In economic news, the Labor Department said first-time applications for jobless benefits dropped by 30,000 to 304,000 last week after a sharp jump in the first week of July. The volatility was attributed to seasonal trends in auto sector hiring.
The Conference Board's index of leading indicators for June rose 0.1 percent — below estimates of 0.2 percent — after sliding 0.6 percent the month before. The modest gain reinforced hopes of a gradual slowdown in the economy.
Elsewhere, the Fed's latest reading on Philadelphia-area manufacturing activity in July came in at 6, half the 12 forecast by economists and down sharply from 13.1 in June.
Apple's updated laptop line and popular iPod music player drove up its third-quarter profit nearly 48 percent, countering fears that the company is losing its luster. Apple climbed $6.40 to $60.50.
Motorola topped Wall Street forecasts on greater demand for handsets. Shares rose $1.35 to $20.60.
But Dow component Intel said its earnings tumbled 57 percent as competition forced the chipmaker to cut its prices. Intel lost $1.39 to $17.10.
Qualcomm Inc. (QCOM) added to the tech sector's gloom with its cautious fourth-quarter outlook. Qualcomm fell 88 cents to $35.85.
Honeywell International Inc. (HON), also a Dow component, said profit swelled 73 percent, prompting the manufacturer to raise its full-year guidance. However, concerns about slowing growth pulled its stock down $1.62 to $36.62.
Ford swung to a loss last quarter, hurt by a shift from trucks to lower-margin vehicles. Ford slid 14 cents to $6.19.
Japan's Nikkei stock average jumped 3.08 percent. Britain's FTSE 100 lost 0.12 percent, Germany's DAX index gained 0.12 percent and France's CAC-40 was higher by 0.38 percent.
Declining issues topped advancers by more than 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume of 2.55 billion shares trailed the 2.83 billion shares that changed hands Wednesday.
The Russell 2000 index of smaller companies sank 18.73, or 2.67 percent, to 683.61.