Wall Street lower on earnings caution

October 13, 2009

, NEW YORK, Oct 13 – US shares traded mainly lower on Tuesday with investors pausing to digest gains from a recent rally and awaiting a wave or corporate earnings reports.

The Dow Jones Industrial Average dropped 16.02 points (0.16 percent) to 9,869.78 at 1540 GMT, a day after a mixed day on Wall Street that allowed the blue-chip index to notch a new 2009 high.

The Nasdaq composite edged up a fractional 0.54 points (0.03 percent) to 2,139.68 and the broad-market Standard & Poor\’s 500 index shed 4.15 points (0.39 percent) to 1,072.04.

In the absence of major economic data, the focus was squarely on the corporate front and earnings.

The market gave a lukewarm response to earnings from Johnson & Johnson as the pharmaceutical giant topped estimates with a profit of 3.3 billion dollars but "failed to impress with its sales," which fell 5.3 percent, said Patrick O\’Hare at Briefing.com.

"Some traders may have decided to take some profits ahead of the big wave of earnings reports that will hit the tape today and extend for the next month," noted Fred Dickson at DA Davidson & Co.

"A solid earnings reporting season is necessary to fuel the current bull market for stocks."

Key for the market could be the earnings reports from computer chip giant Intel, a tech bellwether, due at the close of trade, and banking giant JPMorgan Chase early Wednesday.

"Expectations are relatively high for both companies," said O\’Hare.

"Negative surprises would throw a wrench in recovery arguments and invite closer scrutiny of valuation levels that could lead to some more concerted selling interest."

Intel shares rose 0.44 percent to 20.49 dollars.

Johnson & Johnson slid 2.56 percent to 60.93 dollars and JPMorgan Chase lost 2.06 percent to 45.14.

On the dealmaking front, Cisco Systems rose 0.57 percent to 23.92 dollars after announcing a deal to buy mobile infrastructure firm Starent Networks, up 17.12 percent at 34.00 dollars

The bond market, closed Monday for Columbus Day, rose. The yield on the 10-year US-Treasury bond eased to 3.317 percent from 3.384 percent Friday and that on the 30-year bond dipped to 4.158 percent against 4.227 percent. Bond yields and prices move in opposite directions.

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