Stocks Slide On UPS Forecast

WCCO-TV

April 09, 2008

Stocks pulled back Wednesday after UPS lowered its first-quarter profit forecast, adding to concerns about the health of corporate earnings.

United Parcel Service Inc., the world's largest shipping carrier, cited a weaker economy and higher fuel costs. Investors this week received reports from aluminum producer Alcoa Inc. and chip-maker Advanced Micro Devices Inc. that have created some uneasiness in the market about overall first-quarter results.

Investors also awaited data due Wednesday on wholesale prices. There are also speeches scheduled from Federal Reserve Chairman Ben Bernanke, Fed Governor Randall Kroszner, and Dallas Fed President Richard Fisher.

In the first hour of trading, the Dow Jones industrial average fell 6.02, or 0.05 percent, to 12,570.42.

Broader stock indicators declined. The Standard & Poor's 500 index fell 3.02, or 0.22 percent, to 1,352.52, and the Nasdaq composite index declined 6.12, or 0.26 percent, to 2,342.64.

Declining issues outnumbered advancers by about 7 to 6 on the New York Stock Exchange, where volume came to 121.5 million shares.

Bond prices edged higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.52 percent from 3.56 percent late Wednesday.

Government data scheduled for release Wednesday are expected to show crude oil inventories rose last week for the second straight period. Ahead of that report, however, light, sweet crude rose 44 cents to $108.94 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Gold prices rose, while the dollar was mixed against other major currencies.

In economic news, The Mortgage Bankers Association said mortgage application volume rose 5.4 percent during the week ending April 4. Applications for the week ended April 4 were up 10.9 percent from the same week a year ago.

Economists expect a Commerce Department report to show wholesale sales and inventories increased at a slower pace in February as distributors reduced stockpiles after slow holiday sales.

In corporate news, UPS' earnings forecast weighed on the company's stock. UPS warned at an investor conference last month that it might miss its earnings target if weakness seen in February didn't ease. UPS fell $2.22, or 3 percent, to $71.09.

AMR Corp.'s American Airlines is expected to cancel more flights Wednesday as it attempts to comply with federal rules about wiring on about 300 of its planes. Airline officials said they canceled about 500 flights Tuesday but didn't know how many would be scrubbed Wednesday. AMR fell 23 cents, or 2.1 percent, to $10.09.

The Russell 2000 index of smaller companies fell 0.54, or 0.08 percent, to 711.38.

Overseas, Japan's Nikkei stock average fell 1.05 percent. Britain's FTSE 100 rose 0.21 percent, Germany's DAX index declined 0.21 percent, and France's CAC-40 fell 0.14 percent.

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