Newspaper article THE JOURNAL RECORD

Blue Chips Continue to Slide

Newspaper article THE JOURNAL RECORD

Blue Chips Continue to Slide

Article excerpt

NEW YORK (AP) -- Blue chips fell for the third straight day Tuesday, toppling on a swath of profit warnings and layoff announcements from big companies including Merrill Lynch.

The market was also awaiting a decision on interest rates by the Federal Reserve, which was meeting Tuesday and Wednesday and is expected to cut rates by 0.25 percentage report. The central bank has already cut rates five times this year, a total of 2.5 percentage points, to reinvigorate the economy.

The Dow Jones industrial average ended down 31.74 at 10,472.48, after falling more than 100 points both Friday and Monday.

The market's broader indicators finished mixed. The Nasdaq composite index advanced 13.75 to 2,064.62, while the Standard & Poor's 500 index slipped 1.84 to 1,216.76.

While prior rate reductions have inspired rallies, analysts say investors now need signs that companies are beginning to benefit from the lower borrowing costs before they start buying again.

"The issue is not will the Federal Reserve cut interest rates. The issue is will there be a payoff, and if so when?" said Hugh Johnson, chief investment officer for First Albany Corp.

The market punished the latest companies to announce profit warnings, including Merrill Lynch, down $7.54 at $58.91. The brokerage warned that second-quarter profits have suffered due to sluggish equity volume and will be 52 cents to 57 cents a share, missing the 82 cents Wall Street had expected. Merrill Lynch also said it has cut 3,300 jobs this year.

Outback Steakhouse fell 70 cents to $27.25 after announcing it will miss analysts' second-quarter earnings expectations of 52 cents a share.

Network equipment maker 3Com fell 19 cents to $4.84 before announcing at the end of the session that it lost 61 cents a share, 4 cents more than Wall Street was expecting. It slipped further, down 12 cents, in extended-hours trading.

International Paper, a Dow industrial, eked out a small gain, up 10 cents at $35.50, after announcing Monday it was cutting 3,000 jobs, or 10 percent of its U.S. work force.

"Until the earnings environment turns, and the market perceives that we're in trouble," said Gary Kaltbaum, market technician for Investors' Edge Partners. …

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