U.S. MARKET AVERAGES
A hectic sell-off of tech shares marked Wednesday morning session. Stocks sharply declined as disappointing quarterly earnings released by major tech companies like Intel and Yahoo raised worries about corporate earnings. Investors also worried about the heavy slump of the Japanese Nikkei, down 3%, and other global markets. Meanwhile, oil prices extended their climb past $66 a barrel.
Dow component
Intel Corp., the world''s top chipmaker, reported Q4 results below expectations on weak demand for the processors used in desktop computers. Piper Jaffray downgraded its rating on the company and cut its price target.
Yahoo Inc., the world''s largest Internet media company, also posted quarterly earnings that fell short of Wall Street expectations.
International Business Machines Corp., the world''s biggest computer company, said quarterly profit rose higher than expected. Consequently, JPMorgan maintained its 'neutral'rating on IBM.
Yet most of the U.S. market''s losses could be blamed almost entirely on tech-sector selling, with other stocks generally holding firm after the Labor Department reported better-than-expected retail inflation data.
Technology stocks were the most conspicuous decliners in the morning session. Energy stocks also posted weakness on profit-taking from the recent run up. The oil sector dropped 1.3%.
The airline sector bounced back, recovering from a week-long slide that took it to a 2-month low. The HMO sector climbed during the morning to erase some recent losses. The sector rose about 1.7%, led by greater-than-3% gains in
Aetna (
AET: chart) and
Humana (
HUM: chart).
Ethan Allen (
ETH: chart) jumped to a new 52-week high on strong earnings and upbeat guidance.
Exelon (
EXC: chart)added to a recent advance to set a fresh peak.
Archer-Daniels-Midland (
ADM: chart) also pushed to a fresh peak.
Dana Corp. (
DCN: chart) added to its earnings-related decline, extending its 52-week low.
Impac Mortgage (
IMH: chart) and
Apollo Group (
APOL: chart) also extended their lows.
In midday trading, the tech-focused Nasdaq composite index fell 26.99, or 1.17%. The Dow Jones industrial average dropped 53.15, or 0.49%, and the Standard & Poor's 500 index lost 7.27, or 0.57%.
Bonds were little changed, with the yield on the 10-year Treasury note steady at 4.33% from late Tuesday.
ECONOMIC NEWS
Consumer prices unexpectedly showed a modest decline in December, according to a report from the Department of Labor. The drop in prices was largely due to a continued decrease in energy prices.
The Labor Dept. said that its
consumer price index fell 0.1 percent in December following a 0.6 percent decrease in November. Economists had been expecting prices to increase by about 0.1 percent.
The decrease in prices was due in large part to a 2.2 percent drop in energy prices, which continued lower after falling 8.0 percent in November. Prices for transportation and apparel also fell in December.
The core CPI, which excludes food and energy prices, rose 0.2 percent in December, matching the increase seen in the two previous months. The modest increase came in line with economist estimates.
The report also showed that the CPI rose 3.4 percent for the 12 months ended in December compared to a 3.3 percent increase in 2004. At the same time, the core CPI rose 2.2 for 2005, unchanged from the previous year.
INTERNATIONAL MARKETS NEWS
Asian-Pacific benchmarks closed Wednesday deeply in the red, hurt by heavy selling pressure. The Nikkei ended down for a second straight session, dropping 2.94% to 15,314.18. Tokyo Stock Exchange finished 20 min earlier as the number of orders and executions has increased so sharply that threatened to exceed the systems’ 4 million-order capacity. South Korea’s Kospi tumbled 2.64%, Taiwan’s Weighted index slid 3.16%.
European stocks closed sharply down on disappointing sales from Intel and a heavy sell-off in Asian and U.S. The German DAX 30 tumbled 1.2%, the French CAC 40 recovered from early losses to close down 0.7%, and London’s FTSE 100 dropped 0.6%.
OIL, METALS, CURRENCIES 
