New York – Stocks fell Monday as Delphi Corp.’s bankruptcy filing and lowered outlooks at Northrop Grumman Corp. and Xilinx Inc. set a gloomy tone on Wall Street ahead of the upcoming third-quarter earnings season.
The market extended last week’s losses as investors grew eager for earnings reports to gauge the impact of hurricanes Katrina and Rita, and to get a glimpse of where the economy is headed as companies forecast future results. Stocks took a hit after Northrop said the storms would hurt its 2005 profit, while chipmaker Xilinx pegged its sales below previous targets.
However, “this is the time when you get profit warnings instead of earnings surprises,” said John Forelli, portfolio manager at Independence Investments LLC. “Once the reports start flying in next week, you typically get a lot of positive reinforcement from earnings.”
The market received some good news after the close, when aluminum producer Alcoa Inc. posted a profit that beat analysts’ forecasts despite pressure from soaring energy costs and lower aluminum prices.
Wall Street had some early support from a $7.5 billion acquisition in the insurance sector and an upgrade on International Business Machines Corp., but the major indexes slipped into negative territory after each lost more than 2 percent last week.
Volume was light as many traders took the Columbus Day holiday off. At the close of trading, the Dow Jones industrial average lost 53.55, or 0.52 percent, to 10,238.76, its lowest close since mid-May.
Broader stock indicators also fell. The Standard & Poor’s 500 index dropped 8.57, or 0.72 percent, to 1,187.33, while the Nasdaq composite index sank 11.43, or 0.55 percent, to 2,078.92.
The Bloomberg Colorado Index, a price- weighted list of companies based in the state, fell 2.45 to 303.48.
Oil prices eased slightly as traders weighed expectations for greater demand this winter against a report last week showing September consumption declined 3 percent in the face of record energy prices. A barrel of light crude slid 4 cents to $61.80 on the New York Mercantile Exchange.
