The cell-phone company said its earnings will be at the lower end of expectations, triggering some selling of technology issues.
Wall Street continued buying blue chips on Tuesday, sparked by investors' bullish sentiments for upcoming earnings reports. But an earnings warning from Nokia triggered a rash of selling in technology issues.
Nokia's warning that its earnings would be at the lower end of its expectations cast a shadow over the Nasdaq and the InformationWeek 100. The Finnish cell-phone maker blamed its performance on having underestimated customer demand for less-expensive cell phones, and its stock price fell $3.94, or 18.6%, to $17.21.
Yahoo also fell, dropping $1.22 to $48.77, after Schwab Soundview Capital Markets downgraded the Internet company to "neutral" from "buy." Yahoo is scheduled to announce its first-quarter results after Wednesday's session.
Our InformationWeek 100 fell 5.68, or 1.7%%, to close at 337.70, while the Nasdaq fell 19.22 points, or 0.9%, to close at 2,059.90. The Nasdaq 100 tracking stock fell 4 cents, or 1.1%, to end at $37.04 on lower-than-average volume of 92 million shares.
"What we're seeing here, particularly on the Nasdaq, is reaction to the Nokia announcement," Scott Wren, equity strategist for A.G. Edwards & Sons, told The Associated Press. "I tend to think this isn't that big a deal, though. We still have some potential upside surprises in earnings going forward."
Meanwhile, large-cap stocks drifted upward during an afternoon rally, apparently lifted by investor optimism about the economy and corporate earnings, which are expected to be above average.
The Dow industrials rose 12.44, or 0.1%, to close at 10,570.81, while the S&P 500 fell 2.41, or 0.2%, to end the day at 1,148.16.
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