|DOW once again tested sub 10500 area, closed @ 10505.|
I had expected small cap interest to pick up in Jan, but that hasn't happened yet. They're going down with the ship.The Jan effect becoming a legend of the past.
Jan effect comuing late. A shift as blue chips etc continue to flounder.
U.S. stocks close sharply lower; Dow, Nasdaq skid 1.1%
Thursday January 13, 4:33 pm ET
By Susan Lerner
NEW YORK (CBS.MW) - Blue chips closed at their lowest level in five weeks and the Nasdaq at its lowest point in eight weeks as a strong profit report and bullish outlook from Apple Computer failed to calm investor jitters about what the fourth quarter reporting season will hold for the market.
"I think there's some question -- can these companies report better-than-expected numbers," said Robert Pavlik, portfolio manager at Oaktree Asset Management.
Putting a damper on sentiment Thursday were crude prices, which closed at their highest level since late November, and a mixed batch of data on the state of the U.S. economy.
Blue chips faced added pressure from Verizon Communications after its profit warning and from losses in Pfizer after the Food and Drug Administration warned the drugmaker that ads for its Celebrex and Bextra arthritis drugs are misleading.
A late-day sell-off left the Dow Jones Industrial Average (^DJI - News) at its lowest close since Dec. 8, suffering its biggest point loss since Nov. 19. The blue chip barometer finished the day down 111.95 points, or 1.1 percent, at 10,505.83.
The Nasdaq Composite Index (NasdaqSC:^IXIC - News) , meanwhile, tumbled 21.97 points, or 1.1 percent, to 2,070.56 - it's lowest close since Nov. 19.
The S&P 500 (TICKER: $SPX ) skidded 10.25 points, or 0.9 percent, to 1,177.45.
Decliners led advancers 18 to 15 on the New York Stock Exchange and 20 to 11 on the Nasdaq. Big Board volume topped 1.5 billion shares, while more than 2.1 billion shares traded on the Nasdaq.
"I think the action we're seeing in the market is signaling a regime shift - a psychology shift," said Stephen Sachs, head of trading at Rydex Investments. The path of least resistance was up between October and December and it feels like that mentality has clearly changed."
Pacing the blue-chip decline were Verizon and Pfizer.
Pfizer (NYSE:PFE - News) slid 2.7 percent after the FDA said in a Jan. 10 letter released on Wednesday that the drug giant failed to disclose information on risks in different advertising campaigns and made "unsubstantiated effectiveness claims" in its ads.
Fellow Dow component Verizon (NYSE:VZ - News) , meanwhile, was slapped with two more downgrades as Credit Suisse First Boston and Robert W. Baird each cut their ratings on the telecommunications carrier a day after Goldman Sachs did the same.
Late Wednesday the company said higher retirement-related costs and the sale of several businesses would drag on 2005 profits.
Verizon shares gave back 3 percent.
General Motors (NYSE:GM - News) , meanwhile, slumped 2.8 percent amid weakness in the auto sector. The world's largest automaker reiterated its outlook for 2004 and 2005 but auto parts makers issued mixed forecasts.
Home Depot (NYSE:HD - News) also provided an outlook.
The home-improvement retailer dropped 1.1 percent, after forecasting flat to weaker growth in 2005.
The company said it sees fiscal 2005 earnings per share growth of 10 percent to 14 percent and sales growth of 9 percent to 12 percent and estimated 2004 earnings per share would increase 20 percent to $2.26 and same-store sales growth of about 5 percent.
Within the Dow, only Alcoa (NYSE:AA - News) , Caterpillar (NYSE:CAT - News) , Altria Group (NYSE:MO - News) and Walt Disney (NYSE:DIS - News) managed to end the day in the green.
Apple (NasdaqNM:AAPL - News) was a bright spot in the broader market as shares rose to a more than four-year high on news its fiscal first-quarter profit soared more than fourfold as sales rose 74 percent, far surpassing Wall Street estimates, on rabid consumer demand for its iPod digital music players.
Apple's net income quadrupled to 70 cents a share, up from 17 cents in the fiscal 2004 quarter, while sales rose to $3.49 billion from $2 billion. At least three brokers boosted their ratings on the stock after the report. Apple shares closed up 6.6 percent at $69.80.
Elsewhere, McKesson (NYSE:MCK - News) rose 0.9 percent after the company agreed to pay $960 million to settle a securities class-action lawsuit against the San Francisco-based drug distributor and its subsidiary, the former HBO & Co.
McKesson said the payout, plus the company's decision to establish reserves for ongoing HBO litigation, would result in a pretax charge taken against its results for the fiscal third quarter of $1.2 billion, or roughly $2.70 a share.
RadioShack (NYSE:RSH - News) , meanwhile, said sales for the fourth quarter rose 7 percent to $1.6 billion -- 3 percent higher on a same-store basis -- driven by sales in the retailer's wireless, imaging and electronics departments. The company also reaffirmed its 2004 and 2005 earnings outlooks, as RadioShack shares added 5.7 percent.
Earlier, the Commerce Department said U.S. retail sales increased a seasonally adjusted 1.2 percent in December, led by a big jump in autos. This was ahead of expectations for an increase of 0.9 percent, while sales excluding autos gained by 0.3 percent, as expected. See Economic Report.
The Labor Department, meanwhile, said the number of people filing for state unemployment benefits for the first-time rose by 10,000 to 367,000 last week, the highest since September. Read more.
Labor also said overall prices for imported goods fell at the sharpest rate in nearly two years in December, reflecting the recent sharp drop in the price of oil. See Economic Report.
Keying off these reports, the price on the benchmark 10-year Treasury note closed up 12/32 to 100 15/32 to yield 4.19 percent, down from 4.24 percent at Wednesday's close.
The dollar rebounded against both the euro and the Japanese yen. The greenback was up 0.3 percent versus the euro at $1.3219 and up slightly against the yen at 102.39. See Currencies.
In the energy pits, February crude closed up $1.67 at $48.04 a barrel on the New York Mercantile Exchange. See Futures Movers.
Elsewhere in the commodities market, gold fell for the first time in three days. The February contract closed down $1.50 at $425.10 an ounce in New York. See Metals Stocks.