October 21, 2008 / 9:13 AM / 11 years ago

Weak profit view hits stocks; Apple and Yahoo up late

NEW YORK (Reuters) - Stocks skidded on Tuesday, as commodity shares fell on fears of a global recession and a rash of disappointing earnings heightened worries about the deteriorating profit picture.

A trader works on the floor of the New York Stock Exchange, October 21, 2008. REUTERS/Brendan McDermid

Oil companies and miners weighed on the broader market as commodity prices slid and miner Freeport-McMoRan Copper & Gold’s profit dropped sharply. Freeport McMoran’s shares fell 10.8 percent.

With further signs that credit markets were starting to heal, investors’ attention turned to the dismal profit outlook.

Earnings disappointments were widespread. Tech bellwether Texas Instruments Inc warned of slowing sales for its widely used analog chips, while chemical company DuPont Co cut its full-year forecast.

“The push and pull right now is that on the one hand, credit markets seem to be easing up a bit, but on the other hand, every company is going to say in their earnings outlooks that the economy looks weak,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

The Dow Jones industrial average fell 231.77 points, or 2.50 percent, to close at 9,033.66, while the Standard & Poor’s 500 Index shed 30.35 points, or 3.08 percent, to 955.05, just above its low for the day. The Nasdaq Composite Index dropped 73.35 points, or 4.14 percent, to 1,696.68, near its session low.

TECH RALLY AFTER THE BELL

Technology companies slid in the regular session, driving the Nasdaq down more than 4 percent, ahead of results from iPod maker Apple and Internet company Yahoo.

But after the closing bell the tone changed for tech companies.

Apple’s shares rose more than 3 percent after it said its quarterly profit rose 26 percent, though it gave an outlook for the current quarter well below Wall Street’s expectations.

And Yahoo shares rose more than 8 percent in after-hours trade despite the company’s posting of sharply lower profit.

CATERPILLAR AND DUPONT FALL

Caterpillar Inc, a maker of excavators and bulldozers, also missed profit expectations, sending its stock down 5.1 percent to $38.83.

Freeport, the world’s largest publicly traded copper producer, said quarterly profit fell by a third and would curtail planned mine expansions because of weaker metals prices and current economic conditions.

Shares of Freeport-McMoRan dropped 10.8 percent to $32.74, while the American Stock Exchange’s Gold BUGS index slid 9.7 percent. U.S. front-month crude declined $3.36, or 4.5 percent, to settle at $70.89 a barrel.

Texas Instruments shed 6.3 percent to $16.85, while shares of Dow component DuPont slid 8 percent to $33.28.

The gloomy corporate news underscored the severity of the fallout from the U.S. housing slump and the impact of the prolonged global credit crisis.

Even though there were further signs on Tuesday of a thawing of credit markets, investors feared the logjam has probably done damage to U.S. and world economic prospects.

On Nasdaq, shares of Apple Inc were a top drag, down 7.1 percent at $91.49. Yahoo’s shares fell 6.1 percent to $12.07.

But diversified manufacturer 3M Co bucked the trend — its stock climbed 4.4 percent to $60.04, lending support to the Dow, after the company posted a stronger-than-expected quarterly profit.

VOLATILITY AND LOW VOLUME

In volatile trading, the Dow swung 280.28 points from its intraday high of 9,284.55 to its session low at 9,004.27.

Slideshow (7 Images)

The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street’s fear gauge, edged up 0.26 percent on Tuesday to 53.11 at the close. Last Thursday, the VIX hit a record intraday high at 81.17.

Trading on the New York Stock Exchange was the thinnest since September 24, with about 1.16 billion shares changing hands, below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.19 billion shares traded, below last year’s daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by slightly more than 2 to 1 and, on the Nasdaq, by about 3 to 1.

Editing by Jan Paschal

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