Stocks ended trading with wide losses Thursday. Despite a lift late in the session, all major indexes fell more than 1.3%. Mixed corporate earnings news and weak economic data sparked profit taking.
The Dow Jones industrial average fell 120.17 points, or 1.31%, to 9,036.04. The broader Standard & Poor's 500 index declined 13.54 points, or 1.35%, to 988.67. Meanwhile, the tech-heavy Nasdaq composite index -- which had outperformed this week -- led declines, slipping 31.77 points, or 1.82%, to 1,715.69.
Second quarter expectations were ramped up by stronger-than-expected first quarter corporate profits and broad rallies in the major indexes, especially in technology, according to S&P MarketScope. Heading into Thursday's session, the Nasdaq had jumped 30.85% on the year.
After Wednesday's closing bell, Internet media company Yahoo! (YHOO) met Wall Street's quarterly earnings expectations. Shares in Yahoo! fell 8% Thursday, however, as some traders were hoping for the company to outperform estimates, according to S&P MarketScope.
Also announcing earnings after Wednesday's close, biotechnology outfit Genentech (DNA) swung to a second-quarter profit, beating analysts' EPS expectations.
Thursday brought more earnings news. Before the opening bell, PepsiCo (PEP) said second-quarter profits rose to 58 cents a share, in line with consensus estimates. Shares rose more than 4% Thursday.
Also reporting before the bell, Abbott Laboratories (ABT) announced lower quarterly profits because of a charge relating to a probe of the company's marketing.
Atlanta-based bank SunTrust (STI) missed earnings estimates for the second quarter. Shares in SunTrust dipped 1% Thursday.
On Friday, General Electric (GE) is expected to announce earnings before the trading session begins.
Earnings season kicks into high gear next week, with reports expected from a slew of major companies, including: Apple (AAPL), J.P. Morgan Chase (JPM), Citigroup (C), Intel (INTC), Motorola (MOT) Ford (F), and Coca-Cola (KO).
In other corporate news, shoe maker Nike (NKE) said it would acquire privately-held rival Converse for $305 million.
In economic news, initial jobless claims for the week ended July 5 rose surprisingly, from a revised 434,000 to 439,000. Continued claims rose to 3,818,000 -- the highest level since Feb. 23, 1983, according to economic research outfit MMS International.
Also, U.S. import prices rose 0.8% in June, after a revised 0.8% decline in May. Export prices dropped 0.2% in June, after a 0.1% gain in May. The data were weaker than expected.
On Friday, the June producer price index and May goods and services trade data are set to be released. MMS forecasts a 0.2% increase in the PPI, and a trade deficit of $42 billion -- unchanged from April's level.
Prices of U.S. Treasuries were mostly higher Thursday, as stocks were pressured by profit taking, and jobless claims and trade price data came in weaker than expected. The 30-year issue was slightly lower, pressured by rumors that the long bond would be reintroduced after the resignation of Treasury Undersecretary Peter Fisher.
In Europe, the Bank of England cut its key rate 25 basis points to 3.5%, the lowest level in 49 years. The European Central Bank also held a policy meeting, but left rates unchanged.
Federal Reserve Board chief Alan Greenspan testified before the Senate Energy Committee Thursday that higher natural gas had affected gas-dependent industries. Greenspan did not comment on the broader economy. On July 15, Greenspan is slated to report to Congress about monetary policy.
European markets finished trading lower Thursday. In London, the Financial Times-Stock Exchange 100 lost 25.9 points, or 0.64%, to 4,028.8, despite a 25 basis-point rate cut by the Bank of England. In Germany, the DAX Index shed 52.59 points, or 1.58%, to 3,269.84. Germany inflation hit a three and a half year low in May, at 0.7%. In France, the CAC 40 lost 41.65 points, or 1.33%, to 3,098.28.
In Asia, major stock indexes ended lower. Japan's Nikkei index finished down 35.33 points, or 0.35%, to 9,955.62, after reaching a year-to-date high in afternoon trading. Meanwhile, Hong Kong's Hang Seng index fell 44.1 points, or 0.44%, to 9,983.31.