U.S. stocks fall, breaking five-day gain streak
Wed October 08, 2003 05:31 PM ET

(Adds Yahoo, Genentech after close, paragraphs 3, 8-11)

By Rachel Cohen

NEW YORK, Oct 8 (Reuters) - Stocks fell on Wednesday, snapping a five-session string of gains, as Wall Street awaited next week's full flood of earnings reports and searched for clues on the outlook for corporate America.

With scant economic data due this week and the flow of quarterly scorecards still light, investors were warily sorting through the first profit reports.

Among those coming in after the close of regular trading on Wednesday were Internet media company Yahoo Inc. YHOO.O and Genentech Inc. DNA.N , the world's second-largest biotechnology company, both of whom reported higher profit in the third quarter. Their shares rose in after-hours trading.

Investors are watching for forecasts for earnings beyond the third quarter, since much of the market's recent run-up has been in anticipation of strong third-quarter profits, traders said.

"It may come down to the kind of guidance that corporations give for their corporate outlook going forward," said David Memmott, head of listed block trading at Morgan Stanley. "Their earnings might be good, but if they don't know if they can sustain these levels, then the market will probably roll over."

The Dow Jones industrial average .DJI dropped 23.71 points, or 0.25 percent, to 9,630.90, and the broader Standard & Poor's 500 Index .SPX slipped 5.47 points, or 0.53 percent, to 1,033.78. The technology-laced Nasdaq Composite Index .IXIC fell 14.07 points, or 0.74 percent, to 1,893.78.

Volume was active with 1.24 billion shares changing hands on the New York Stock Exchange and 1.79 billion shares traded on the Nasdaq. Decliners outnumbered advancers by about 17 to 15 on the NYSE and 19 to 13 on the Nasdaq.

YAHOO, GENENTECH SHARES RISE

Yahoo reported a larger profit for the third quarter, citing strength in its advertising and premium services businesses, and it raised its earnings estimates for the year.

The news pushed its shares up to $39.80 on the Instinet electronic brokerage system from its close of $38.79 on the Nasdaq.

Genentech Inc. said its third-quarter net income rose 70 percent, driven by sales of two key cancer drugs and higher revenue from drug development collaborations.

The company, which also affirmed its 2003 revenue and earnings outlook, rose to $79.20 on Instinet from its close of $78.75 on the New York Stock Exchange.

Biovail Corp. BVF.TO BVF.N took a hit amid concerns about its slowing sales and aggressive accounting practices. Its shares, the most active and the biggest percentage loser on the NYSE, fell $3.85, or 13.3 percent, to $25.20.

The spotlight was also on General Electric GE.N and Vivendi Universal EAUG.PA after they said they had signed a final deal to merge their show business companies. GE's shares slipped 53 cents, or 1.7 percent, to $30.20 and were among the NYSE's most active stocks.

Billing service provider CSG Systems International Inc.'s CSGS.O shares dropped 40 percent on Wednesday after it said its quarterly earnings will be slashed by as much as 60 percent as a result of a ruling that it must pay $120 million in damages related to its contract dispute with the nation's largest cable TV company Comcast Corp. CMCSA.O .

CSG's shares fell $6.22 to $9.28, making it the biggest percentage loser on the Nasdaq. It also said its quarterly revenue from Comcast, its biggest customer, could fall by as much as 38 percent.

Two providers of infusible medicines, Curative Health Services Inc. CURE.O and Option Care Inc. OPTN.O , on Wednesday cut their earnings forecasts, sending the shares of both companies plummeting.

Curative fell $4.60, or 25 percent, to $13.69. Option Care fell $2.97, or 24 percent, to $9.26. They were among the top percentage losers on the Nasdaq.