Disappointing first-quarter profits from consumer-focused companies helped push stocks lower early today as investors, fearing a further economic slowdown, collected profits from the previous session's rally,
While strong earnings from Google Inc. pleased investors, bad news from companies including Maytag Corp. and Costco Wholesale Corp., led Wall Street to wonder whether consumers were cutting back on spending. And, with the economy looking so uncertain, investors also decided to cash in some of their gains from Thursday's rally, which gave Wall Street its best day in two years.
At 1 p.m., the Dow Jones industrial average fell 28.30, or 0.28 percent, to 10,190.30, after gaining 206 points on Thursday
Broader stock indicators also lost ground. The Standard & Poor's 500 index was down 2.99, or 0.26 percent, at 1,156.96, and the Nasdaq composite index dropped 18.75, or 0.96 percent, to 1,943.66.
Adding to the concern over consumer spending, oil prices continued their rise, with a barrel of light crude quoted at $54.85, up 65 cents, on the New York Mercantile Exchange.
The bond market rallied after Thursday's selloff, with the yield on the 10-year Treasury note falling to 4.27 percent from 4.30 percent late Thursday. The dollar fell against most major currencies, while gold prices were higher.
Google surged $14.71, or 7.2 percent, to $218.93 as it continued to pleasantly surprise investors with its latest earnings report. The online search company surpassed Wall Street profit forecast by 37 cents per share in the first quarter, and the stock reached a new high in the first minutes of trading.
Euphoria over Google was overshadowed, however, by earnings gloom from the consumer sector. Costco warned that gasoline sales were eroding its margins despite steady sales in other areas. Costco slid $4.09, or 9.5 percent, to $39.93.
Slower sales have forced Maytag to ramp up its cost-cutting plans. The appliance maker plunged $3.70, or 24.5 percent, to $11.40 after reporting a steep slide in first quarter profits.
Eastman Kodak Co. also saw a rough quarter as the world's biggest film producer continued on its bumpy transition to digital imaging and photography. The company swung to a loss for the quarter and missed analysts' forecasts by 30 cents per share after one-time charges. Kodak tumbled $3.34, or 11 percent, to 27.06.
"One thing is clear and that is that companies involved in the consumer area are having a tougher time on earnings," said Subodh Kumar, chief U.S. strategist at Toronto-based CIBC World Markets Inc.
Costco, Kodak and Maytag had the biggest declines in the S&P 500 today.
In merger news, MCI Inc. climbed 30 cents to $26.80 after Qwest Communications International Inc. continued its tenacious pursuit of its rival, upping its bid to $30 per share, or $9.7 billion. MCI had already agreed to a $23.10 per share, or $7.6 billion, bid from Verizon Communications Inc. Qwest added 7 cents to $3.68, while Verizon was down a penny at $34.25.
Amgen Inc. slipped 45 cents to $58.80. The world's biggest biotechnology company said it had first-quarter sales of $2.83 billion, below the average estimate of $2.87 billion by analysts surveyed by Thomson Financial.
Nasdaq Stock Market surged $1.98 to $12.63. A group of companies led by Nasdaq is likely to announce today that it will buy Instinet Group Inc., an electronic trader and brokerage firm, the Wall Street Journal reported, citing an unidentified person familiar with the situation. Instinet advanced 20 cents to $5.90.
Apple Computer dropped $1.30 to $35.88. The maker of the iPod digital music player dropped after Creative Technology Ltd., whose products compete with the iPod, said third-quarter profit fell 72 percent after it cut prices and earned less on investments.
Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 802.95 million shares, compared with 949.46 million at the same point on Thursday.
The Russell 2000 index of smaller companies was down 5.65, or 0.94 percent, at 593.33.
Overseas, Japan's Nikkei stock average rose 0.56 percent. In Europe, Britain's FTSE 100 was up 0.62 percent, Germany's DAX index gained 0.70 percent, and France's CAC-40 climbed 0.74 percent.