Corporate results deflate US stocks

New York :  US stocks fell for a third day yesterday as more disappointing earnings and economic news flowed in.

The Dow Jones industrial average fell more than 60 points after the Labour Department reported that the number of people filing for unemployment benefits for the first time rose last week to 484,000. The gain was small at 2,000, but economists had expected the figure to drop. The news pointed to continuing weakness in the labour market, yet another sign that the economic recovery is weakening.

The latest earnings reports added to the market's darkening view of the economy. Cisco Systems' revenue from its latest quarter and its forecast for future revenue both fell short of analysts' expectations. The company's stock fell more than 9 per cent and other technology stocks also fell.

Investors have been focused on revenue since companies began reporting second-quarter earnings almost a month ago. They're concerned by the connection between revenue and the economy — if revenue is down, it's a sign that consumers' reluctance to spend is starting to affect companies' sales and profits. Investors see the revenue shortfalls as another sign of a weakening recovery.

Europe takes a hit

Markets in Europe fell after the US unemployment news. In London, the FTSE-100 index fell 0.1 per cent in afternoon trading. Germany's DAX index was down 0.4 per cent, while the CAC-40 index in Paris was down 0.8 per cent. Earlier, Japan's Nikkei index closed down 0.9 per cent.

Stocks extended their losses from Wednesday, when the Dow fell 265 points as investors reacted to the Federal Reserve's lowering of its assessment of the recovery on Tuesday.

Analysts say investors don't have a sense of whether the recovery will hold. The uncertainty has led to heavy selling, but many traders are staying out of the market altogether and not making any moves. That has made trading volume even lighter than usual during July and August.

In early trading yesterday, the Dow fell 66.22, or 0.6 per cent, to 10,312.61. The Dow fell almost 320 points over the course of Tuesday and Wednesday. The Standard & Poor's 500 index fell 8.04, or 0.7 per cent, to 1,081.43. The Nasdaq composite index fell 25.13, or 1.1 per cent, to 2,183.50.

Losing stocks were ahead of gainers by about 3 to 1 on the New York Stock Exchange, where volume came to 228 million shares.

Interest rates rose slightly in the treasury market after falling sharply on Wednesday, when investors were seeking the safety of government securities. The yield on the 10-year treasury note, which rises as its price falls, was 2.72 per cent, up from late Wednesday's 2.69 per cent.

General Motors reported net income of $1.33 billion in the April-June quarter, its second straight quarterly profit. The company, which is 61 per cent owned by the federal government, is moving toward a public offering of its shares. Cisco fell $2.37, or 10 per cent, to $21.36. Microsoft Corp. was off 34 cents, or 1.4 per cent, at $24.52. Sara Lee fell 37 cents, or 2.6 per cent, to $14.10, while Kohl's fell $1.63, or 3.4 per cent, to $46.15.