Technology stocks were battered as investors fretted over the latest batch of profit warnings from tech companies and waited for guidance from the results of software giant Oracle Corp.'s (ORCL).
After the market close Monday, Oracle reported fiscal fourth-quarter earnings per share of $0.15, a penny more than Wall Street's forecast of $0.14. Revenues for the quarter came in at $3.3 billion, $100 million short of analysts' estimate. "It seems at the very least mildly positive," says Henry Asher, president of Northstar Group and a shareholder of Oracle stock. "Assuming those are clean numbers, the franchise seems to be built to withstand something hideous. I'd really like o hear what [CEO Larry] Ellison has to say," Asher says. Oracle is expected to provide more detailed comments on its outlook during a conference call Monday evening.
The software maker's impending news pressured tech stocks as investors looked to the tech bellwether for signs about what the future holds. The technology-laced Nasdaq Composite shed 39.79 points, or 1.96%, to 1,988.64, its first close below the 2,000 level since April.
Another tech earnings warning concerned investors: Communications network operator Level 3 Communications (LVLT) warned that it would layoff 1,400 workers -- and that its net loss in 2001 will be higher than previously forecast.
In recent weeks, investors have been swinging between optimism that the worst of earnings shortfalls is over and worries that an economic rebound will take longer than expected. Warnings of earnings woes have caused the stock market to pull back sharply, with the tech-heavy Nasdaq posting its worst week of the year last week, losing 8.4%. Analysts are expecting more confessions and continued pressure on the stock market .
Meanwhile blue chips were helped by some uplifting company news from industrial conglomerate United Technologies Corp. (UTX) and car maker General Motors Corp. (GM)
The Dow Jones Industrial Average gained 21.74 points, or 0.20%, to 10,645.38. The broader S&P 500 index shed 5.93 points, or 0.49%, to 1,208.43.
Among other stocks in the news Monday, Cendant Corp. (CD), which owns Avis rental car and Century 21 real estate, said it would buy reservations systems company Galileo International Inc. (GLC) for $2.9 billion.
U.S. Treasuries finished lower amid a lack of economic data to scrutinize Monday. Ongoing evidence of a prolonged slowdown has many investors banking on another interest rate cut at the Federal Reserve's policy-setting meeting on June 26 and 27.
More rate cuts may be needed, Richmond Fed President Alfred Broaddus said Monday, even though the central bank has little room to further boost the economy with rate cuts after a series of aggressive rate cuts this year.
Last Friday the goverment said the overall consumer price index, a key measure of inflation at the consumer level, rose 0.4% and the core index increased 0.1% in May. Much of the gain on the month was due to a 6% jump in retail gasoline prices, which boosted the energy aggregate a solid 3.4%. The data suggest inflation pressures remain modest.
Fed Chairman Alan Greenspan will speak on "The Growing Need for Skills in the 21st Century" before the U.S. Labor Department's national summit on the 21st Century Workforce at 8:45 a.m. ET Wednesday.
European markets finished lower, with concerns over high debt levels at telecom equipment maker Marconi pressuring stocks. In London, the Financial Times 100 ended off 51.40 points, or 0.90%, to 5,671.60. Germany's DAX Index slid 46.14 points, or 0.78%, at 5,869.04. In France, the CAC 40 finished down 83.56 points, or 1.59%, to 5,160.28.
Asian equity markets ended lower. In Japan, the Nikkei 225 Index ended Monday down 92.59 points, or 0.72%, to finish at 12,697.79. Hong Kong's Hang Seng index lost 153.72 points, or 1.17%, to 12,948.78. By Amy Tsao in New York