Markets plummeted again yesterday, weighed down by disappointing earnings from Exxon Mobil Corp., AT&T Corp. and Lucent Technologies.
“This is a time correction,” said Frank Gannon, senior equity portfolio manager for SunAmerica Mutual Funds. “We’re all waiting for it to turn around and get better.”
He added that he’s still optimistic: “I’m still in the camp that there’s going to be good news by the end of the year, though we haven’t seen it yet.”
The Dow Jones industrial average dropped 183.30 to close at 10,241.12. The Nasdaq Composite index fell 29.32, closing at 1,959.24. The Standard & Poor’s 500 index lost 19.38 to 1,171.65.
The Nasdaq and the S&P closed below benchmarks of 2,000 and 1,200, respectively, that were thought to be the bottom marks of this market.
Joe Sunderman, manager of research and development at Schaeffer’s Investment Research, believes the market has a way to go before bottoming out.
“The market is giving everyone headaches. There are continued investors’ concerns about earnings.”
And, he added, even the positive news has been deceptive.
“Some companies have exceeded Wall Street estimates but are not showing top-line growth. Technical companies are just showing a slowdown,” he said, adding, “Those that are meeting estimates are doing so by minimizing cost structures.”
“We still see signs that there’s still down to go,” Sunderman said, adding that Schaeffer’s has a “bearish” market outlook.
“Wall Street strategists are talking about a rally and have a bull sentiment, but everyone seeing the same future with big gains while the market continues to look weak has us very cautious.”
Still, Lehman’s Charles Reinhard sees glimmers of light at the end of the tunnel.
“There’s a better ratio of positive to negative reports this quarter versus last quarter,” he said. “It is all pointing to an improvement in the third quarter.”
He believes the market is at the bottom of a V curve and has begun recovery and that the turn in the market is coming sooner rather than later.
“Our Fed policy indicator jumped – we got the signal last week. All indicators are suggesting the turn is coming.
“We think the third quarter will be the final quarter of the earnings recession.”
But, he warned, there will still be more earnings reports this week.
SunAmerica’s Gannon summed it up: “We need time.”
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Run for cover!
Corporate America dropped a bomb on Wall Street yesterday when three of the most widely held companies reported dismal profits, sending stocks down:
* AT&T lost 2.9 percent after posting diappointing second-quarter profits.
* Lucent fell 19 percent after it said it will cut another 15,000 to 20,000 jobs.
* Exxon Mobil dropped 3.6 percent after reporting profits below analysts’ forecasts.