US stocks: Markets hit 2005 lows as eBay, Qualcomm weigh

NEW YORK - Stocks slid on Thursday, setting lows for 2005, after disappointing reports from eBay Inc. and Qualcomm Inc. added to worries about earnings growth, while a survey showed factories in the Mid-Atlantic region expanded at a slower pace than expected.

Shares of online auctioneer eBay slumped 19 per cent a day after it missed Wall Street's earnings expectations for the first time in at least three years.

Wireless technology company Qualcomm fell nearly 8 per cent, after saying current-quarter earnings would fall short of the average Wall Street forecast.

The Dow Jones industrial average was down 68.50 points, or 0.65 per cent, at 10,471.47. The Standard & Poor's 500 Index was down 9.22 points, or 0.78 per cent, at 1,175.41. The Nasdaq Composite Index was down 27.71 points, or 1.34 per cent, at 2,045.88.

The declines pushed the Dow, Nasdaq and S&P to fresh lows for 2005. For the year to date, the Dow is down 2.89 per cent, the S&P 500 is down 3.01 per cent and Nasdaq is down 5.96 per cent.

"This is a market that is clearly concerned that earnings growth is slowing," said John Caldwell, chief investment strategist at McDonald Financial Group.

When highly valued sectors such as technology "stub their toe the damage is proportionately worse," he added.

Internet stocks were battered by eBay's woes. Yahoo Inc. was down 67 cents at US$35.78, Amazon.com Inc. was down US$1.60 at US$42.36 and Google Inc. was US$3.38 lower at US$193.92. Ebay was down US$19.72 at US$83.33 while Qualcomm fell US$3.29 to US$37.78.

In economic news, the Philadelphia Federal Reserve Bank's business activity index showed growth at Mid-Atlantic factories expanded in January but at a far slower rate than in December.

However, the Conference Board, a private research firm, said a gauge of future US economic growth rose for a second straight month in December.

A slip in oil prices and rise in the dollar failed to support shares.

Traders monitored the progress of President George W. Bush's inauguration, which passed without incident. Security was extremely tight, as it was the first inauguration since the Sept. 11 attacks in 2001. Investors were also looking ahead to the election in Iraq on Jan. 30.

"We've got the inauguration today and the Iraqi elections in a week -- that's the background noise that's rattling around and maybe a convenient excuse for people to do more active selling," said Caldwell.

Other shares falling included Citigroup Inc., down 24 cents at US$47.77 after the world's largest financial services company said 2005 profit was likely to be near the low end of Wall Street estimates.

Ford Motor Co., the second-largest US automaker, fell 3 per cent, or 47 cents to US$13.46. It reported a quarterly profit, reversing a year-earlier loss, with earnings from its finance arm helping override weak automotive operations for the third straight quarter.

Oil company ConocoPhillips fell 1.7 per cent, or US$1.54 to US$87.73. Deutsche Bank on Thursday downgraded its outlook for the company.

But May Department Stores Co. surged 9 per cent, or US$2.88 to US$34.25, after The Wall Street Journal said Federated Department Stores Inc. was in preliminary talks to buy it. Federated fell 3 per cent, or US$1.77 to US$55.31.

Trading was heavy, with 1.69 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 2.2 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Decliners outnumbered advancers on the New York Stock Exchange by about 2 to 1 and by about 7 to 3 on Nasdaq.

Warren West, president of Greentree Brokerage Services, noted some increased volatility in the Nasdaq ahead of Friday's expiration of January options -- when single stock futures, individual equity options and some stock index options for the month expire.

Typically, options expiration is orderly but some volatility may occur as players unwind those positions at the last minute against other derivative products.

- REUTERS