By Donna Kardos Yesalavich
U.S. stocks opened slightly lower Tuesday as a disappointing
first-quarter report from Alcoa and wider-than-expected trade
deficit dampened sentiment, pushing the Dow Jones Industrial
Average back below the 11000 level.
The Dow Jones Industrial Average (DJI) was down 20 points, or
0.2%, at 10986 in early trading. Alcoa (AA) was the measure's worst
performer with a drop of 2.8%. The aluminum giant reported a
narrower quarterly loss and held out hopes for improvement in the
year ahead, striking a positive note as the first major company out
of the gate to report first-quarter earnings. But its earnings
excluding items merely met analysts' estimates while revenue came
in weaker than expected. UBS cut its investment rating on the stock
to neutral from buy following the report.
Intel (INTC) is the next heavyweight to report, with the world's
largest chip maker slated to post its first-quarter numbers after
the close of trade Tuesday. Ahead of the report, Intel edged up
0.2%, making it the Dow's best performer.
The Nasdaq Composite (RIXF) slipped 0.1%. The Standard &
Poor's 500 index (SPX) declined 0.2%, with the materials and energy
sectors leading its decline.
Tuesday's small drop in stocks comes after the Dow on Monday
closed above 11000, something it hadn't achieved since the
financial system began teetering nearly 19 months ago. By inching
past the milestone, the Dow continued what amounts to a stealth
rally in a market characterized by below-average trading volume and
small daily moves.
The market is now looking to see if the S&P 500 can climb
above the key 1200 mark. It closed Monday at 1196.48, its highest
close since Sept. 26, 2008. However, the measure appeared unlikely
to reach that level Tuesday, as investors were disappointed by
Alcoa's report and data that showed the U.S. trade deficit rose
more than expected in February.
The wider U.S. trade deficit came as soaring imports of consumer
goods and industrial supplies outweighed the impact of oil imports
falling to their lowest level in 11 years. The deficit rose 7.4% to
$39.70 billion in February, higher than the $39 billion shortfall
Wall Street was expecting.
Also hurting sentiment, small business owners reported little
pick up in their sales or confidence in March, according to a
report released Tuesday. The Small Business Optimism Index lost 1.2
points to 86.8 in March, according to the National Federation of
Independent Business.
Meanwhile, data from the Labor Department showed prices of goods
imported into the United States rose by a monthly 0.7% in March,
after a revised 0.2% drop in February. Economists had expected a
1.0% increase. While the rise in U.S. import prices was led by
higher oil prices, broader price measures in the world's largest
economy show that inflation remains tame.
The dollar weakened against the euro as the Greek government's
sale of 1.56 billion of Treasury bills Tuesday met with strong
demand and reassured investors that it can meet its short-term
financial needs. But the Greek government still finds itself having
to pay very high interest rates, which will have to fall rapidly in
future bond sales for plans to cut the budget deficit to remain on
track.
The dollar was also weaker against the yen Tuesday. Crude-oil
futures fell below $84 a barrel, while gold futures also slipped.
Treasurys edged up, putting the 10-year note at a yield of
3.81%.
Among stocks in focus, CF Industries (CF) slipped 2.5% after the
fertilizer company predicted first-quarter sales below Wall
Street's expectations because of declining sales in its nitrogen
and phosphate segments. The company also said it plans to sell at
least 10.8 million shares and $1.6 billion in debt to raise funds
to repay borrowings under its $1.75 billion senior secured bridge
facility.
Talbots (TLB) climbed 6.3%. The women's apparel retailer swung
to a profit in its fiscal fourth quarter and forecast revenue for
the new year slightly above analysts' views. Its first-quarter
revenue outlook also topped expectations.