US stocks fell, finishing their worst week since September, as reduced earnings forecasts from companies including General Mills Inc and JDS Uniphase Corp fed concern a profit rebound will be weaker than expected.
"Companies have been reporting earnings without much enthusiasm for the outlook, so everybody is asking, `Where's the beef?'" said Robert Armknecht, who helps manage US$170 billion at Columbia Management Group Ltd. "There is no beef."
While most analysts expect earnings growth this quarter, he anticipates a rebound will be delayed until the second half of the year.
The Standard & Poor's 500 Index fell 15.16, or 1.4 percent, to 1,076.32. Microsoft Corp and Intel Corp led the decline.
Computer-related shares contributed 40 percent of the drop.
The Dow Jones Industrial Average slid 124.34, or 1.2 percent, to 9,910.72, the first close under 10,000 since Feb. 22. Walt Disney Co tumbled after UBS Warburg LLC downgraded the company. The NASDAQ Composite Index fell 49.81, or 2.9 percent, to 1,663.89.
The value of US stocks slid US$491 billion this week. In the week that trading resumed after the Sept. 11 terrorist attacks, stocks lost US$1.38 trillion.
This week, the S&P 500 tumbled 4.3 percent, the NASDAQ fell 7.4 percent and the Dow average dropped 3.4 percent, their biggest declines since the week ended Sept. 21. The Dow and S&P 500 have declined five of the past six weeks. All three indexes are down for the year, led by the NASDAQ's 14.7 percent drop.
Stocks were hurt by a University of Michigan index showing consumer confidence fell to a three-month low in April. Wal-Mart Stores Inc, the world's biggest retailer, led consumer shares lower, dropping US$1.20 to US$55.80.
Gross domestic product, the total value of all goods and services produced in the nation, rose at a 5.8 percent annual rate, the Commerce Department said. That topped the median forecast of 5 percent in a Bloomberg News survey of 68 economists.
While it was the biggest increase since the last three months of 1999, investors expect growth to cool.
"The rebound in economic growth isn't going to be particularly strong," said Andrew November, head of global strategy at Scottish Widows Investment Partnership, which oversees US$113 billion in assets. "Our analysts are having difficulty finding companies they want to invest in."
November expects the S&P 500 to end the year at 1120, which would be its third straight annual decline.
Three shares fell for every two that gained on the New York Stock Exchange and two fell for each gainer on the NASDAQ Stock Market. Some 1.37 billion shares traded on the Big Board, 5 percent more than the six-month daily average.
General Mills, maker of Cheerios cereal, fell US$2.37 to US$42.93 after it cut 2002 and 2003 profit estimates as sales slumped and the company struggled to integrate Pillsbury, which it bought in October.
JDS Uniphase dropped US$0.50 to US$4.53. The world's biggest maker of fiber-optic equipment parts lost more money in the current quarter than analysts forecast. The company said it will cut 20 percent of its 10,000-person workforce as customers spend less on fiber optic gear.
Microsoft led the NASDAQ and the S&P 500 lower, falling US$2.23 to US$51.50. Shares of the biggest software maker dropped 10 percent this week as Chairman Bill Gates said in court testimony that he will pull the Windows operating system if legal penalties against the biggest software company stand.
VeriSign Inc plunged US$8.35, or 46 percent, to US$9.89. The company that registers Internet addresses lowered second-quarter sales and earnings forecasts.
Intel, the biggest chipmaker, slid US$0.97 to US$28.12.
Disney dropped US$0.90 to US$24.10. UBS Warburg analyst Christopher Dixon said investors should stop buying its shares until ratings at the company's ABC television network improve. Dixon cut his recommendation to "hold" from "buy." While Disney said first-quarter earnings topped expectations, revenue declined.
Dixon also lowered Viacom to "buy" from "strong buy," telling clients in a research note that shares will rise less than 20 percent over the next year. Viacom slid US$1.63 to US$48.21.
AOL Time Warner Inc, the biggest Internet and media company, fell US$0.77 to US$18.72.
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