NEW YORK — Stocks fell Thursday as profit warnings from Federated Department Stores and British telecom firm Marconi reminded investors how badly business is suffering here and abroad.
The warnings added to the market’s dread over second-quarter earnings results, which companies begin issuing this month. Profit warnings from chip maker Advanced Micro Devices and data storage company EMC Corp. after the market closed added to the chances that Wall Street will endure additional pressure on Friday.
“No one is in a hurry to buy. Earnings warnings continue to surface at a fast and furious pace,” said Alan Ackerman, executive vice president of Fahnestock & Co.
“Retail sales are due to be reported next week, so this has set up a very high level of anxiety,” Ackerman said. “With Federated numbers as they are, it appears shoppers are doing more browsing than buying, not just on Wall Street.”
He added that the market is worried that consumer spending, which accounts for two-thirds of the nation’s economy, will continue to shrink. On the positive side, however, retailing and other consumer stocks could soon trend higher as federal income tax rebate checks begin hitting mailboxes this month.
The technology and telecommunications sectors came under pressure from Marconi, which announced Wednesday it was halving its earnings forecasts for 2001, and will cut 4,000 jobs. Marconi shares on the Nasdaq plunged $3.68 to $3.35, a 52 percent drop.
Other telecom shares fell, including equipment makers Alcatel, down $3.54 at $17.46, and JDS Uniphase, declining $1.06 to $11.61.
Still, analysts said investors shouldn’t be too alarmed by Marconi’s news, calling it nothing new in the struggling telecom sector.
“Who could be surprised today with a telecom provider announcing they are not go to meet expectations. You would have to have your head in the sand if you thought we were out of the woods there,” said Jon Brorson, head of equities at Northern Trust in Chicago.
The market also focused on WorldCom after it lowered earnings projections for fiscal year 2002, but raised revenue forecasts based on the restructuring efforts of operations in Brazil. WorldCom slipped 19 cents to $14.28.
Advanced Micro Devices announced after the market closed that it expects to earn 3 cents to 5 cents a share for the second quarter, below the 27 cents a share previously expected. Trading of AMD, which blamed weak demand and competitive pressure that drove down prices, fell $4.64, or 16 percent, to $24 in after-hours trading, adding to a drop of $1.12 to $28.64 in the regular session.
AMD’s big competitor, Intel, traded lower in sympathy. Intel fell $1.20 in extended session after dropping 62 cents to $29.84 in regular dealings on the Nasdaq.
Meanwhile, EMC said it expected to earn 4 cents to 6 cents per share for the second quarter, well short of the 17-cent consensus of analysts surveyed by Thomson Financial/First Call.
Shares of EMC fell $4.74, or 16 percent, to $25.29 in extended trading, compounding a 5 percent, or $1.59, decline in the regular session, when it closed at $30.03.
The warnings are the latest in a stockpile preceding the second-quarter earnings reports that companies will start releasing this month.
Although Wall Street has been expecting the most recent quarter to be quite weak, the market has been rattled by the extent to which companies have suffered. Since late May, investors have heard more than 600 warnings, many of which reduced already lowered forecasts, according to Thomson Financial/First Call.
Investors are still holding out hope that business will improve in the second half after the benefits of six interest rate cuts have begun to take hold.
Wall Street’s losses on Thursday were spread across market sectors. Only three of the Dow’s 30 stocks finished higher.
Honeywell rose $1.59 to $36.50. New CEO Lawrence A. Bossidy, said late Tuesday the company — whose merger with General Electric is effectively dead — will remain independent until he can “stabilize” the operation, which could take a year.
The other gains came from SBC Communications, which advanced 68 cents to $41.30, and Alcoa, rising 53 cents to $40.78.
A Labor Department report also reminded investors of the weak economy. The government said the number of Americans filing new claims for state unemployment insurance rose last week after falling for three weeks in a row. The jump provided fresh evidence that the struggling economy continues to take a toll on workers.
However, Brorson, of Northern Trust, also cautioned against “reading too much” into Thursday’s weakness, which was exagerrated by lighter-than-normal trading in a holiday week in which many traders were not around. The market was closed Wednesday for the Independence Day holiday.
Declining issues outnumbered advancers slightly more than 8 to 7 on the New York Stock Exchange. Consolidated volume came to 1.09 billion shares, compared with 732.63 million shares on Tuesday when the market was open for just half the day.
The Russell 2000, which measures the performance of smaller company stocks, index fell 4.10 to 492.73.
Overseas markets were lower Thursday. Japan’s Nikkei stock average closed down 0.2 percent. In Europe, Germany’s DAX index fell 0.3 percent, France’s CAC-40 lost 1.0 percent, and Britain’s FT-SE 100 declined 0.9 percent.
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