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Trimmed forecasts slice NYSE's gains

US stocks fell, driving the Standard & Poor's 500 Index to its first weekly drop in five and trimming the benchmark's biggest quarterly gain since 1998.

Tenet Healthcare Corp and Avery Dennison Corp led declines in the week after cutting their profit forecasts. Eli Lilly & Co fell today after Merrill Lynch & Co said sales of its biggest drug may disappoint next year and trimmed its earnings estimate.

Stocks slid even as the Federal Reserve cut its benchmark lending rate Wednesday to a 45-year low. Some investors say they want to see evidence that the economy and profit growth are gathering pace before bidding stocks higher.

"The bearish case right now is: `Listen, we've had a run-up in stocks and very little evidence that we're seeing a pickup in the economy,'" said W. Shannon Reid, who manages the US$1 billion Evergreen Strategic Growth Fund.

For the week, the S&P 500 slipped 2 percent and the Dow Jones Industrial Average lost 2.3 percent. The NASDAQ Composite Index shed 1.2 percent, its second drop in three weeks.

Today, the S&P 500 fell 9.60, or 1 percent, to 976.22. The Dow average slipped 89.99, or 1 percent, to 8989.05. The NASDAQ retreated 8.75, or 0.5 percent, to 1625.26.

Reports this week showed a decline in durable goods orders, a 19th straight week of initial jobless claims above 400,000 and a drop in consumer confidence.

Still, the S&P 500 is on pace for its best quarter in four and a half years on expectations the economy would accelerate following the Iraq war. The S&P 500 has gained 15 percent. The Dow average has risen 12 percent and NASDAQ has jumped 21 percent since March 31, the most for both measures since the fourth quarter of 2001.

About seven stocks declined for every six that advanced on the New York Stock Exchange and NASDAQ Stock Market. Some 1.2 billion shares changed hands on the Big Board, making it the slowest trading day since May 23.

Tenet, a US hospital chain whose Medicare billings are under investigation, tumbled 28 percent for the week -- the biggest such decline in the S&P 500. The company reduced its full-year forecast on Monday because of rising costs and lower payments from the government. Tenet also said second-quarter results were "significantly below" analysts' estimates.

Avery Dennison shed 11 percent this week after the world's biggest label maker said on Monday second-quarter net income would miss its own estimates because of slowing sales growth.

Health-care stocks were the biggest drag on the S&P 500 today, accounting for more than a quarter of its decline.

Lilly slid US$1.41 to US$68.12. Merrill analyst David Risinger said sales of the company's schizophrenia drug Zyprexa may disappoint next year and cut his profit estimate for next year. The analyst downgraded the stock to "neutral" from "buy."

Abbott Laboratories fell US$1.22 to US$43.60. Moody's Investors Service said it may reduce the drugmaker's credit rating after Abbott said it will pay US$622 million to settle civil and criminal probes into marketing practices. Lower credit ratings raise borrowing costs because investors consider the debt to be more risky.

Pfizer Inc, the world's biggest drugmaker, declined US$1.00 to US$35.00.

Nike Inc, the No. 1 athletic-shoe maker, lost US$3.85 to US$53.08. The company said a dispute with Foot Locker Inc, its largest customer, hurt orders. Nike's orders for shoes and clothing for delivery to US stores between June and November fell 10 percent, a bigger decline than what analysts had expected.

Nike stopped shipping popular sneakers to Foot Locker last year because the retailer reduced orders for high-priced sneakers.

Foot Locker fell US$0.40 to US$13.10. Merrill analyst Virginia Genereux said fewer Nike orders means the retailer may not be receiving any products related to athletes including LeBron James, the top pick in the National Basketball Association's draft.

Genereux cut Nike and Foot Locker to "neutral" from "buy." Traders said corporate executives may be more optimistic about the economy's prospects because they are planning more acquisitions.

Circuit City Stores Inc recorded the biggest advance in the S&P 500 this week after Mexican billionaire Carlos Slim made a US$1.5 billion offer to buy the firm. Its shares jumped 18 percent for the week even as the company rejected the offer because it was too low.

New York Community Bancorp agreed to buy Roslyn Bancorp Inc for about US$1.58 billion in stock to form the third-largest New York savings and loan by assets.
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