Midday Market Update: Stocks Sputter on Earnings Concerns

By Jennifer Yousfi
Managing Editor

U.S. markets got off to a slow start on Monday, as worries about weak first quarter earnings continued to drag on stocks.

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 21.00 points (-0.17%), to trade at 12,304.42. The tech-laden Nasdaq Composite Index dropped 10.26 points (-0.45%), to reach 2,279.98. And the broader Standard & Poor's 500 Index decreased 4.85 points (-0.36%), to hit 1,327.98.

The energy sector (up 0.80%) and the transportation sector (up 0.49%) posted the biggest gains, while the financial sector (down 0.93%) and the consumer cyclical sector (down 0.42%) posted the largest declines.

Analysts at Goldman Sachs Group Inc. (GS) predicted an "awful" earnings season, saying that misses by General Electric Co. (GE) and United Parcel Service Inc. (UPS) last week were just the beginning.

"We expect generally disappointing results and a swath of lowered profit guidance that will drive the Standard & Poor's 500 Index lower," a team led by David Kostin, Goldman's New York- based U.S. investment strategist, wrote in a report today.

Shares of Wachovia Corp. (WB) dropped after the bank announced it would reduce its dividend and raise $7 billion in capital.

"Wachovia's not great news, but it certainly shouldn't catch us by surprise - we know what business they're in," Art Hogan, chief market strategist at Jefferies & Co., told MarketWatch.

In overseas markets early today, Japan's Nikkei 225 Index lost 3.1% with a decline of 406.22 points to close at 12,917.51. Hong Kong's blue-chip Hang Seng Index dropped 3.5% with an 856.59-point loss, to close at 23,811.20.

European bourses were down, with the Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had gained ground against the yen (up 0.010%), but lost ground against the euro (down 0.114%) and the pound sterling (down 0.666%).

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