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Stocks Dip on Weak Corporate Guidance

Wednesday, July 23, 2003 11:11 a.m. ET

By Vivian Chu

NEW YORK (Reuters) - U.S. stocks slipped by Wednesday midmorning, as anemic forecasts from industry leaders including Boeing Co. <BA.N> and AOL Time Warner <AOL.N> failed to reassure investors that an economic upswing is under way.

Boeing, the world's largest aircraft maker, posted a quarterly net loss of $192 million versus a year-earlier profit. It also cut its forecast for commercial jet deliveries this year, and shaved its revenue forecast for next year due to weak demand for commercial airplanes, among other factors.

"The market's down because of some of the earnings announcements. AOL's earnings came in OK, but the Boeing warning was ominous because they're putting off a pickup in demand," said Charles Ryan, vice president and equity analyst at BB&T Asset Management in Raleigh.

"We're all hanging on some kind of pickup in demand and seeing signs of a recovery, and when you get a name like Boeing putting off jet orders, it puts a damper on the market," Ryan said. "We didn't see any strong signs the economy is turning around, and in fact we're seeing signs of the opposite."

The Dow Jones industrial average <.DJI> was down 19.6 points, or 0.21 percent, at 9,138.85. The broader Standard & Poor's 500 Index <.SPX> slipped 4.58 points, or 0.46 percent, to 983.53. The technology-laced Nasdaq Composite Index <.IXIC> declined 1.86 points, or 0.11 percent, to 1,704.24.


Boeing shares rose 40 cents, or 1.23 percent, to $32.97 after falling more than 1 percent earlier in the session. Before the open, Boeing posted a quarterly net loss of $192 million versus a year-earlier profit, hurt by $1.1 billion in charges at its satellite-making unit and lower revenue amid the travel industry slump.

AOL Time Warner, the world's largest media company, fell after it reported a sharp increase in its second-quarter earnings but also forecast revenue from America Online would decline this year. AOL shares fell 87 cents, or 5.16 percent, to $15.98.

But Eastman Kodak Co. <EK.N>, the world's top maker of photographic film, rose even after it reported a sharp drop in second-quarter earnings and said it would cut 4,500 to 6,000 jobs. Shares of Kodak jumped 6.67 percent, or $1.64, to $26.23 and were the blue-chip Dow's biggest percentage gainer.

On the Nasdaq, Sun Microsystems <SUNW.O>, the No. 3 maker of computer servers, sank after reporting on Tuesday an 80 percent drop in its quarterly profit, as revenue declined for the ninth consecutive quarter on weak demand for computer servers. Sun shares fell 18.24 percent, or 88 cents, at $3.89 and were the Nasdaq's most actively traded issue. (With additional reporting by Doris Frankel in Chicago)



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