US stocks slip as investors fret over earnings

By Elizabeth Lazarowitz

NEW YORK: Stocks stumbled in midday trading on Monday as corporate news and earning warnings battered the technology sector, spreading fear that slower US growth may take a bite out of profits.

Blue chips drifted downward, succumbing to pressure from losses in big-name retailers and high-tech shares, despite underlying support from a stellar performance by energy stocks. A steep drop in shares of Citrix Systems led the Nasdaq composite lower, after the company said it expected its second-quarter earnings to fall short of Wall Street estimates.

"Folks are concerned that we need very impressive growth and earnings in order to justify the valuations that they continue to support," said Key Asset Management chief market strategist Charlie Crane. "Any story or macroeconomic factor that could damage those aggressive revenue forecast is going to have an out-sized impact," Crane added.

The Dow Jones industrial average gave up its early gain, trading down 31 points, or 0.29 per cent, at 10,583, while the Nasdaq index, slumped to its low for the day, down 93 points, or 2.41 per cent, at 3,781. Good news on earnings boosted shares of fiber optic cable maker Corning Inc. after the company said its second-quarter earnings would beat Wall Street forecasts. It blasted 14-15/16 higher to 226-3/4.

But none of that was enough to outweigh sharp declines in big technology and retail names, such as Microsoft Corp., and Hewlett-Packard. Meanwhile, pre-earnings announcements and comments from Wall Street analysts hurt many technology shares.

Citrix Systems Inc., the most heavily traded on the Nasdaq, slammed lower after the company's profit warning sent investors into a selling spree. Citrix fell 18-2/16 to 23-1/16. MicroStrategy Inc. tumbled 18 per cent after a Merrill Lynch analyst said last week's run-up on speculation the customer-management software maker would receive a cash infusion was unwarranted. Its shares were down 12-3/8 at 49-7/8.

The approach of Friday's "triple-witching" expiration of options on stocks and options and futures on stock indices could also help drive trade, traders said. Such quarterly expirations often bring arbitrage activity that can push the market quickly in either direction.

(C) Reuters Limited 2000.