NEW YORK – Stocks extended earlier losses Monday as investors faced a growing flood of reports from some of the 1,500 companies set to hand in their earnings scorecards this week.
Computer chip makers were the main culprit as they led charge into negative territory after a number of Wall Street firms made downbeat comments on the sector.
``Several (Wall Street) firms had some less than positive comments on the semiconductors,'' said Bill Meehan, chief market analyst at Cantor Fitzgerald, ``Business is horrible, but it is clear to anybody that wants to see.''
The Dow Jones industrial average lost 66.94 points to end the day at 10,472.12, while the technology-dominated Nasdaq Composite Index dropped 55.67 points, or 2.67 percent, to 2,029.12.
The broader Standard & Poor's 500 Index lost 13.23 points to 1,202.45.
At least 15 of the 30 components of the Dow Jones Industrial Average and 181 of the Standard & Poor's 500 companies are slated to report quarterly results this week, according to Thomson Financial/First Call.
Investors have gotten a mixed bag of results from the handful of companies that have reported already, including a slew of financials like Citigroup Inc. and Bank of New York Co Inc. on Monday.
``We're in the heart of earnings season and those companies that don't deliver are going to be punished,'' said Guy Truicko, equity portfolio manager at Unity Management, which oversees about $1 billion. ``It's not good when investors are looking at earnings and interest rates and half the picture isn't there right now.''
Analysts expect corporate profits for S&P 500 companies to fall by 18 percent in the second quarter, according to Thomson Financial. But investors are hoping companies will forecast better times after the Federal Reserve cut interest rates six times this year to jump-start the economy.
``One should not expect earnings to rebound at the same velocity as they did in the 1990s,'' said Richard Babson, president of Babson-United Investment Advisors which oversees about $1.8 billion.
``Investors are just waiting ... there has been a lot of anticipation on earnings,'' Babson added. ``The Federal Reserve, by lowering rates, put a floor under the market, but at the same time you don't have a long term advance in the market unless there is an improvement in earnings.''
Semiconductor shares, along with marquee names like computer chip giant Intel Corp., down 60 cents at $29.59, and Web gear giant Cisco Systems Inc, which lost 70 cents at $18.04, weighed on the Nasdaq.
Wit SoundView was among the purveyors of the bad news on the semiconductor companies, said Art Hogan, chief market analyst at Jefferies & Co. Hogan said a research note from the firm reflected bearish comments by officials of chip equipment maker Applied Materials at the Semicon West meeting in San Francisco. Applied Materials slumped $4.05 to $42.31.
``The Wit SoundView report was basically a confirmation of what the AMAT (Applied Materials) officials had said and that was basically that there still seems some softness into next year in this space,'' Hogan said.
The conference and analyst comments heightened investors' concerns about a group deeply troubled by the U.S. economic slowdown, traders said.
Citigroup, the No. 1 U.S. financial services company, said its profits rose 13 percent, buoyed by growth at its international consumer arm. The stock rose 64 cents to $49.50, after trimming its gain in afternoon trading.
Bank of America Corp.'s profits fell 2 percent, hampered by loan losses and slack trading results. The stock of the No. 3 U.S. bank holding company, whose earnings still managed to beat Wall Street estimates, rose $1.51 to $61.76.
The Bank of New York Co Inc., the parent of one of the oldest U.S. commercial banks, said profits rose 8 percent, but also warned that future earnings could fall slightly short of expectations if weak market conditions persist. The company's stock slid more than 11 percent, or $5.76, to $43.64.
Satellite service provider Hughes Electronics Corp., which warned last month that it would add significantly fewer customers than expected in the second quarter, reported lower cash flow from operations for the period and cut its outlook for the full year. Its shares tumbled $1.50 to $18.95.
A big decliner was drugmaker Pharmacia Corp. which fell more than 8 percent, or $4.19 to $42.66. The company said after Friday's close it will supply extra clinical data to the U.S. Food and Drug Administration, which found deficiencies in Pharmacia's application for its pain management drug, parecoxib sodium.
Economic data on Monday from the Commerce Department showed May business inventories were unchanged. It also revised its April reading to a decline of 0.2 percent, compared with a previous reading of unchanged.
Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume was light, coming to 1.03 billion shares, compared with 1.10 billion shares Friday.
The Russell 2000 index was down 6.92 at 483.79.
Overseas, Japan's Nikkei stock average fell 0.1 percent. The mood was also gloomy in Europe. Germany's DAX index slipped nearly 1.3 percent, Britain's FT-SE 100 lost about 0.4 percent, and France's CAC-40 slid almost 0.1 percent.
-- Reuters and the Associated Press contributed to this report.