Stocks fell today after the government reported the nation's unemployment rate reached its highest level in 16 months during January.
Analysts said that while Wall Street is pleased with the Federal Reserve's efforts to stimulate the weakening economy through lower interest rates, many investors remain concerned about company profits.
At 1 p.m., the Dow Jones industrial average fell 89.91 to 10,893.72, after briefly moving above the 11,000 benchmark. The tech-dominated Nasdaq composite index declined 81.24 to 2,701.55. The Standard & Poor's 500 index dropped 18.59 to 1,354.88.
"The concern is not so much with the first quarter, the concern is what the second quarter is going to look like," said Bill Barker, an investment strategy consultant with Dain Rauscher. "That is what is keeping this market off balance."
Intel slipped 75 cents to $37.06 and Oracle lost $1.56 to reach $28.50, while Microsoft gained 31 cents to $62.69. Intel and Microsoft are Dow components.
The Dow was also pulled lower by declines in banker J.P. Morgan, down $1.14 at $54.71, and IBM, off $1.62 at $112.43.
National Semiconductor dropped $1.06 to $26.25. The chipmaker said fiscal third-quarter sales and earnings will miss forecasts as customers reduce inventories.
Silicon Storage declined $1.13 to $13.44. The maker of chips and computer memory cards cut its forecast for first-quarter profit to 25 cents to 29 cents, less than the 51-cent average estimate of six analysts surveyed by First Call.
Cisco Systems, the No. 1 Internet-equipment maker which reports next week, fell $1.06 to $37.19. Juniper Networks, the No. 2 maker of high-capacity computer-networking equipment, lost $1.75 to $106.56.
Verizon Communications fell $3.27 to $51.73 after the biggest U.S. local phone company said it spent more to boost its sales of data and wireless services in the fourth quarter.
Credit Suisse First Boston analyst Dan Reingold said revenues grew less than he had expected, while the company met his fourth- uarter profit forecast because of a lower-than-predicted tax rate. Reingold cut the stock to "buy" from "strong buy."
Professional Detailing tumbled $38.38 to $64.75. The drug-marketing company said it lost its contract with GlaxoSmithKline Plc.
Buy.com Inc. fell 28 cents to 63 cents. The Internet seller of computers, videos and books agreed to sell its U.K. Web operations to an unnamed European buyer, fired 10 percent of its staff and said it will close its Canadian Web site to reduce losses. The shares had fallen 96 percent in the past year through Thursday.
General Motors rose 67 cents to $55.02. Ford Motor fell 20 cents to $28.17. Goldman, Sachs & Co. analyst Gary Lapidus boosted his 2001 profit forecast for both companies and said demand for cars and light trucks may be better than expected. Lapidus raised his profit forecast for GM to $3.75 from $2.50. He increased his prediction for Ford to $2.65 a share from $2.40.
The market opened on the news that unemployment had climbed to 4.2 percent last month, reflecting a slowdown in economic growth that forced thousands of layoffs in autos and other manufacturing industries.
Analysts said the Labor Department report is the latest sign of a weaker economy, and provides an additional catalyst for the Fed to continue lowering interest rates. The prospect of more credit easing is encouraging investors to buy, despite lackluster earnings and the strong likelihood that many companies' forecasts won't improve until the second half of the year.