Stocks finished lower Thursday, as a disappointing report from tech bellwether Intel (INTC) offset an otherwise solid batch of earnings news. Federal Reserve Chairman Ben Bernanke largely restated his soothing testimony from the previous session in remarks before the House of Representatives, while investors also digested mixed Fed minutes. Wednesday's rally may have reflected short-covering, and the lack of follow-through buying accelerated selling Thursday, says Standard & Poor's Equity Research.
The Dow Jones industrial average fell 83.32 points, or 0.76%, to 10,928.1. The broader Standard & Poor's 500 slipped 10.68 points, or 0.85%, to 1,249.13. The tech-heavy Nasdaq composite tumbled 41.3 points, or 1.98%, to 2,039.42.
NYSE breadth was negative, with 23 issues declining for every 10 advancing. NASDAQ breadth was 22-8 negative.
Uncertainty in the minutes from the Fed's June 29 meeting has increased interest-rate uncertainty in the markets, some analysts say. "At this point, we maintain our forecast that a tightening in August is more likely than not, especially following the June core CPI result," notes Bank of America senior economist Peter Kretzmer. "This firming move is unlikely to be the Fed's last."
Earnings season may not buoy stocks as much as bulls hope, some analysts say. "The rise in productivity and trend growth experienced during the late 1990s led to multiple expansion, and a partial reversal of this development suggests multiple compression is likely to limit the positive effect of earnings on stock valuations," observes Steven Ricchiuto, chief U.S. economist at ABN Amro.
Earnings reports returned to the spotlight Thursday. Intel (INTC) was lower after the chipmaker guided its third-quarter revenue to a range of $8.3 billion to $8.9 billion, below Street projections.
On the upside, Apple (AAPL) was sharply higher after the computer maker reported that sales of its Macintosh and iPod products were higher than expected.
Motorola shares (MOT) surged after the cellular phone maker posted a second-quarter profit that was above analysts' estimates. Piper Jaffray lifted its rating on the stock from market perform to outperform.
Drugmaker Pfizer (PFE) added to the upbeat earnings news, beating Wall Street forecasts on a 30% drop in second-quarter net income.
Meanwhile, aerospace company Honeywell (HON) was lower despite posting a 73% increase in second-quarter profit and raising its full-year earnings guidance.
Online auctioneer eBay (EBAY
was lower despite reaffirming its 2006 outlook and saying it would buy back up to $2 billion of its stock.
Shares in Ford (F) dipped after the automaker reported a second-quarter loss of $123 million.
Wireless tech company Qualcomm (QCOM) was down after warning that profit and revenue for its fiscal fourth quarter might be lower than analysts expect.
Other companies reporting earnings Thursday include tech bellwethers Advanced Micro Devices (AMD), Google (GOOG), and Microsoft (MSFT).
More quarterly results are on the way Friday from companies such as Caterpillar (CAT), Halliburton (HAL), and RadioShack (RSH).
Outside of earnings Thursday, Altria (MO) hit a 52-week high after J.P. Morgan reportedly raised its target price on the tobacco company.
On the economic front, the minutes to the Fed's June 29 meeting showed a wide variety of opinions on monetary policy. Separately, the Philadelphia Fed index fell to 6.0 in July, well below expectations.
Weekly jobless claims fell 30,000 to 304,000 in the week ended July 15, from 334,000 a week earlier. The decline was larger than expected, though possibly distorted by auto retooling season and other seasonal factors, says Action Economics. Leading indicators rose 0.1% in June. The economic calendar is quiet Friday.
In the energy markets Thursday, August West Texas Intermediate crude oil futures closed up 34 cents and expired at $73 a barrel amid continued Mideast conflict.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index eased 7.1 points, or 0.12%, to 5,770.9. Germany's DAX index added 6.53 points, or 0.12%, to 5,545.82. In Paris, the CAC 40 index was up 18.5 points, or 0.38%, to 4,865.04.
Asian markets finished sharply higher. Japan's Nikkei 225 index rallied 446.58 points, or 3.08%, to 14,946.84. In Hong Kong, the Hang Seng index gained 375.08 points, or 2.33%, to 16,472.62. Korea's Kospi index advanced 39.65 points, or 3.21%, to 1,273.3.
Treasury yields eased as Bernanke echoed the mild tone of Wednesday's testimony. The 10-year note rose in price to 100-26/32 for a yield of 5.02%, while the 30-year bond moved higher to 91-07/32 for a yield of 5.08%.