Wall Street: Tuesday close

13 April 2012

A DISAPPOINTING revenue outlook from

Nokia

'The market took its cue from Nokia,' said John Caldwell, chief equity strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

'As the market is anticipating better earnings growth in the third and fourth quarter, we'll need confirmation from revenues as well. That's adding a layer of concern in the market today.'

The Dow Jones Industrial Average closed down 79.09, or 0.8%, at 9507.20, having gained nearly 83 points in the previous session. The broader market also finished lower. The Nasdaq composite index fell 15.19, or 0.8%, to 1873.43. The Standard & Poor's 500 index declined 8.47, or 0.8%, to 1023.17.

Nokia fell $1.09 to $15.98 after the cellphone maker said it expects third-quarter revenue to be flat or slightly above forecasts. That disappointed analysts hoping for a more robust outlook.

Stocks have surged in the last month on brokers' upgrades and economic reports that boosted investors' hopes of a strong recovery. But analysts say rising interest rates and weak employment could still threaten the rally. Stocks also may be due for reverses after advancing so quickly.

'Historically, September has been the worst month for stocks,' Caldwell said. 'That always sits in the back of investors' minds. There's always a risk of a self-fulfilling prophecy with selling, and selling begets selling.'

Larry Wachtel, market analyst at Wachovia Securities, said it was a good sign that Tuesday's falls were somewhat modest. Since the rally began in mid-March, the Dow is up 26%, the Nasdaq 47%, and the S&P 28%.

'This is a mild-mannered pullback in a market boiling for six months,' he said. 'After six months in a bull market, normally you retract one-third to one-half of the advance. You haven't come close here. People just don't want to let go.'

Retailers also took a hit after Goldman Sachs lowered the stock ratings of Home Depot, Federated Department Stores and The May Department Stores, citing weak outlooks. Home Depot dropped $1.60 to $32.15, while Federated lost $1.38 to $42.44 and May declined $1.14 to $25.20.

Alpharma dropped $4.21, or 18.6%, to $18.47 after the specialty pharmaceuticals company lowered its third- and fourth-quarter outlook. Morgan Stanley also cut the company's stock rating to 'underweight' from 'equal'.

But McDonald's climbed 24 cents to $23.59 after the fast-food chain said August same-store sales rose 3.8%. In the United States, sales rose 8.8%, representing the fifth consecutive month of gains since announcing a turnaround plan.

Research in Motion surged $6.31, or 22.3%, to $34.55, after the maker of BlackBerry pagers raised its fiscal second-quarter outlook. Several brokers also upgraded the company's rating.

Falling stocks outnumbered rising issues about 9 to 5 on the New York Stock Exchange. Volume was 1.37bn shares, compared with 1.31bn traded on Monday.

The Russell 2000 index, which tracks smaller company stocks, fell 3.56, or 0.7%, to 513.57.

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