US SUMMARY: Back To Square One On Wall Street
DJIA 10205.28 loss 15.50 dn 0.2%
NASDAQ 1802.43 loss 8.24 dn 0.5%
S&P 500 1124.47 loss 1.60 dn 0.1%
Dow Future 10155.00 loss 20.00 dn 0.2%
NASDAQ Future 1380.00 loss 7.50 dn 0.5%
S&P Future 1119.50 loss 3.50 dn 0.3%
10-Yr US Treasury: 5.22% down 0.01
NEW YORK (Dow Jones)--Frustrated by a still elusive business recovery, investors sold stocks lower Thursday when Nokia reported a drop in profits and sales and Advanced Micro Devices offered a weak outlook for the second quarter.
"The majority of companies are coming out with shaky news. One day they say they see signs of a turnaround, then they say, `We were premature.' The turnaround is not coming as quickly as people thought," said Al Mirman, strategist at V Finance in Sarasota, Fla.
After the market closed Thursday, Microsoft became the latest big company to warn of lower profits, giving investors another reason to trade cautiously in the coming weeks. Microsoft also reported fiscal third-quarter earnings that missed analysts' expectations by 2 cents a share.
A lukewarm economic report failed to trigger an upturn. The Conference Board said its Index of Leading Economic Indicators - a key gauge of the direction of the U.S. economy - inched up 0.1% last month after holding steady in February.
"The economy is not deteriorating, but at the same time, we are not getting the momentum people had hoped for," Mirman said.
Among the losers, cell phone maker Nokia fell $2.53, or 12.3%, to $18.10 after reporting first-quarter profits fell 8.5% and sales declined 12%. Nokia also reduced its sales outlook for the remainder of the year.
Chip maker AMD recorded a smaller-than-expect loss for the first quarter, but fell $2.22, or 15%, to $12.60 after saying it still faces tough business conditions. Analysts also don't expect AMD to be profitable until the third quarter.
Microsoft, a Dow stock, declined 26 cents to $56.37. After its profit warning, the software maker tumbled $1.48 in extended-hours trading.
The market shouldn't be surprised to see the tech and telecom sectors stumble, analysts said. After all, these areas are still suffering weak demand and inventory gluts. Because tech and telecom firms mostly sell to other businesses, they also don't benefit as much from consumer spending, which remains relatively strong.
"We have been down this road so many times before... I am skeptical. They all have very substantial areas of oversupply," said Richard A. Dickson, technical analyst for Hilliard Lyons.
A frenzied rally, then a retreat in U.S. government bonds following after a plane crash into a building in Milan reminded markets that investors remain very jittery.
The plane crash was eventually declared an accident by Italian authorities, but not before causing a massive rally in Treasurys as investors sought security.
Such a large reaction embodied, in large part, the so-called "event risk" that investors and traders have been keenly aware of since Sept. 11.
"What we saw today was a sign of the times," said Peter Cordrey, managing director at Prudential Investment Management in Newark, N.J. "With stocks shaky, with the Mideast situation, with the economy's path unclear, the market holds a premium. Then on top of that, news comes out that plays into everybody's fears and you get a huge flight-to-quality."
Treasurys had already been higher before the plane crashed, due in large part to economic news that had shown a jump in U.S. jobless claims and a smaller-than-expected rise in March leading indicators.
ASIAN SUMMARY: IMF Ticks Off Japanese Government
USD-Yen 129.94 loss 0.10 dn 0.07%
AUD-USD 0.5405 gain 0.0022 up 0.3%
Nikkei 225 11,440.42 loss 135.31 dn 1.2%
Hang Seng 11207.55 loss 9.60 dn 0.1%
JGB Yield 1.3900% dn 0.0150
TOKYO (Dow Jones)--Tokyo stocks fell Friday morning with selling centered on technology issues following Wall Street's overnight decline.
The morning decline was led by selling of technology issues, including Kyocera and Sony, communications shares such as NTT, and stocks of computer game manufacturers Nintendo and Sega.
In currency dealings, the dollar slipped against the yen, largely following through on its weakness in New York in volatile trading after a small plane slammed into the tallest building in Italy's financial capital of Milan.
The crash was eventually declared an acccident by Italian officials, but it initially raised fears of another terrorist attack.
Trading, however, remained light ahead of a two-day meeting in Washington of finance officials from the Group of Seven industrialized countries beginning later Friday.
Prices of Japanese government bonds held marginally higher but trading thinned out ahead of a 10-year JGB auction Tuesday.
The International Monetary Fund's call on the Japanese government to consider a supplementary budget to aid the economy seems unprofessional because it's already close to a cyclical rebound, Japan's economy minister said Friday.
"At a time when Japan's economy is about to experience a cyclical recovery, it seems out of focus. It isn't a professional judgment" to suggest that Tokyo compile an extra budget, Heizo Takenaka said in a news conference.
In its World Economic Outlook released Thursday, the IMF said, "A timely supplementary budget should be considered (by the Japanese government) to mitigate fiscal contraction in the latter part of 2002."
EUROPEAN OUTLOOK: Markets To See More Churning, Choppiness
Euro-USD 0.8915 gain 0.0003 up 0.03%
Stlg-USD 1.4494 gain 0.0017 up 0.1%
ZURICH (Dow Jones)--European markets are in for a choppy day as sentiment again flip-flops, leaving shares down slightly, bonds up a tick and the euro stuck in its tracks.
STOCKS: European shares will open slightly lower after twin blasts of disappointment from Microsoft and Nokia.
But because the markets took much of the brunt already on Thursday, Friday's losses should be more modest. Defensives again come into play as prudent investors seek out those companies with predictable earnings.
BONDS: Euro-zone government bonds should inch higher at the opening but may top out quickly after having struggled on Thursday.
"The market is weak (Thursday) because of the upcoming tap of the 10-year Bund next week," a Munich-based trader said. "Economic data out of the U.S. should have lifted the market, but that didn't happen this time around."
Germany will auction around EUR5 billion in a tap of the January 2012 Bund next Wednesday.
All economic data releases were worse than forecast, but failed to support the market. Friday's data calendar lacks any significant reports.
FOREX: The euro failed to capitalize on anti-dollar sentiment, and topped out at around $0.8923 overnight. The euro now seems vulnerable to a short-term setback toward $0.8840. But with the Group of Seven financial meeting this weekend, players may prefer to wait until Monday before making decisions on new positions.
The dollar remained on the defensive, unable to deflect a break below Y130 and then beset by sharp volatility after a small plane flew into Milan's tallest building.
With markets already stressed, initial fears that the incident was a terrorist attack against the Italian city's equivalent of the World Trade Center caused the dollar to dip to intraday lows against the yen at Y129.61. The U.S. currency also dropped to a three-month low at CHF1.6464 Swiss francs on knee-jerk safe-haven buying.
But as it became apparent the incident was almost certainly an accident, the dollar moved off its lows and returned to levels seen prior to reports of the crash. The euro also suffered briefly on fears the Milan incident could be terrorist-related, but bounced back quickly.
Traders say the euro's recent gains may now be running out of steam, undermined by weak data - with euro-zone industrial production declining 3.3% in February from a year earlier.
With the euro flat, the euro/yen cross also took a beating from the strong yen. The G-7 meeting may well take up the yen as a topic for discussion.
-By Dennis Baker; Dow Jones Newswires; 41-1-212-2181;
(MORE) Dow Jones Newswires 19-04-02
0500GMT