US stocks fell as a US$19.2 billion loss at Nortel Networks Corp discouraged investors who had been expecting signs the slump in profits was drawing to a close.
The NASDAQ Composite Index fell for a sixth day, posting its biggest weekly loss in six months, after JDS Uniphase Corp lowered its forecast for sales this quarter, dragging down shares of other makers of fiber-optic network equipment.
"People are losing patience" with disappointing earnings, said Mark Bronzo, who helps manage US$5 billion at Groupama Asset Management in New York. "They keep expecting a recovery but they aren't seeing it."
PHOTOS: REUTERS
The NASDAQ fell 15.64, or 0.8 percent, to 2,028.43, paring a 2.5 percent drop. The Standard & Poor's 500 Index fell 5.51, or 0.5 percent, to 12,14.36 and the Dow Jones Industrial Average lost 66.49, or 0.6 percent to 10,623.64.
Concern that profits won't rebound later this year sent the NASDAQ down 8.4 percent this week, the biggest loss since Dec. 15.
The S&P 500 fell 4 percent for the week while the Dow lost 3.2 percent.
Eight stocks fell for every seven that rose on the New York Stock Exchange.
Nortel fell US$0.74, or 6.9 percent, to US$9.86. The company said it's taking a US$12.3 billion charge to write off the value of some acquisitions and it sees no ``meaningful growth'' in customer spending on new phone equipment until the second half of 2002.
JDS Uniphase dropped US$1.37 to US$12.44. The No. 1 maker of fiber-optic equipment parts cited slowing demand for telecommunications gear. Its shares have dropped 70 percent this year.
"The optical market's looking even worse than we expected," said Paul Kleiser, who helps manage US$4 billion in the Henderson Global Technology Fund, the largest UK technology mutual fund.
Ciena, the second-largest maker of US fiber-optic equipment, fell US$4.53 to US$40.14, while Corning, the biggest maker of fiber and cable used in optical networks, shed US$1.50 to US$14.50.
Among other fiber-optic and networking-equipment stocks, ONI Systems Corp shed US$2.04 to US$24.65 and Applied Micro Circuits Corp retreated US$1.17 to US$15.42.
The slowdown in phone-equipment spending also hurt Andrew Corp, which fell US$1.15 to US$16.50. The maker of wireless-communications systems cut its earnings and revenue forecasts for this quarter.
Cisco Systems Inc, the biggest network-equipment maker, fell US$1.09 to US$16.65 and was the most active stock. Only two of the 10 most active stocks climbed: Oracle Corp, which reports earnings after the market closes Monday, rose US$0.15 to US$15, and Intel Corp gained US$0.07 to US$27.68.
International Rectifier Corp plunged US$18.05, or 33 percent, to US$37.20 after the maker of computer chips for power supplies said sales this quarter won't meet expectations because of reduced demand from makers of communication equipment.
Microsoft Corp fell US$0.88 to US$68.02 and was the sixth most-active stock amid speculation the biggest software company will say earnings won't meet expectations. Microsoft spokesman James Blamey declined to comment.
Stocks pared their losses after a report from the University of Michigan showed consumer confidence fell less than forecast.
"The consumer confidence level was decent and it triggered a little rally," said Jay Finkel, a trader at Lord, Abbett & Co.
Almost 1.6 billion shares traded on the New York Stock Exchange, up 31 percent from the daily average of the past three months. The quarterly expiration of options on stocks and stock indexes and futures on indexes, known as ``triple witching,'' generated more trading than usual.
Also, quarterly adjustments to the S&P 500 triggered trading by funds that try to mimic the index.
McDonald's Corp fell US$1.29 to US$28.67 as the largest fast-food chain said earnings this quarter will be below analysts' expectations because consumers are concerned that European beef isn't safe.
Europe has suffered from outbreaks of hoof-and-mouth disease as well as so-called "Mad Cow" disease. McDonald's also said it would cut spending in some Asian and Latin American markets.
Procter & Gamble Co declined US$2.26 to US$62.60. The top US seller of household products will take a US$1.2 billion charge this quarter, resulting in a loss, as it cuts costs, gets rid of less-profitable brands and fires workers.
CVS Corp tumbled US$6.94, or 13 percent, to US$47.55. Credit Suisse First Boston analyst Edward Comeau said staffing shortages and slow customer service have caused a decline in pharmacy sales at the second-largest US drugstore chain. He dropped his recommendation to "hold" from "strong buy" and lowered his share-price forecast for the next 12 months to as low as US$50 from US$70.
Media-related shares fell after Interpublic Group of Cos and True North Communications Co became the latest advertising agencies to say the slowing economy is crimping earnings.
Interpublic, the third-biggest advertising agency, fell US$5.26 to US$30.74. True North Communications Inc, which Interpublic is acquiring, dropped $6.08 to US$34.74.
Tribune Co declined US$0.44 to US$40.19. The publisher of the Chicago Tribune and Los Angeles Times reduced its second-quarter profit forecast 27 percent, citing a drop in advertising sales.
Fastenal Co fell US$2.57 to US$59.66 after the distributor of industrial supplies said it would earn less in the second quarter than analysts' had expected.
"This is what people have been fearing in the marketplace, the negative earnings announcements," said Robert Basel, co-head of listed trading at Salomon Smith Barney Inc.
JP Morgan Chase & Co, Citigroup Inc. and Bank of America Corp rose after newspapers reported that the companies are winning investment banking business by agreeing to extend loans to companies such as Kraft Inc. Some investors said the stocks look attractive because their earnings growth will be better than in industries such as telecommunications.
Banks are "a place to hide," said James Ellman, who manages US$700 million for Merrill Lynch Investment Advisors and owns Citigroup. "At least banks look a little bit better than the rest." JP Morgan Chase rose US$1.31 to US$44.90, Citigroup gained US$0.69 to US$49.30 and Bank of America rose US$0.32 to US$58.02.
Utilities also rose, as did semiconductor stocks. The Philadelphia Semiconductor index advanced 5.41 to 608.98, led by Micron Technology Inc, up US$1.70 to US$39.50, and Xilinx Inc, up US$0.91 to US$42.09.
Some investors are optimistic that profits and the economy will rebound later this year, because the Federal Reserve has lowered interest rates five times in 2001.
The central bank could do so again June 27, given that inflation reports this week gave no evidence that prices are rising fast enough to dissuade the Fed from cutting rates, investors said.
Consumer prices rose in May at the fastest pace in four months, led by higher electricity costs and the biggest increase in gasoline since September, government figures showed. Still, the core index, which excludes energy and food, rose a less-than-expected 0.1 percent.
"We think the economy is going to recover," said Groupama's Bronzo, who has been buying shares of Walt Disney Co, AOL Time Warner Inc, and Lowe's Cos. "Let's keep one thing in mind, the markets are well off their lows. As bleak as it is, the market has hit bottom."
The Russell 2000 Index of smaller stocks fell 0.25 to 495.13.
The Wilshire 5000 Total Market Index, the broadest measure of US shares, declined 49.96, or 0.4 percent, to 11,238.01.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained