Wall Street report: Weds close
MARKETS clawed their way back into the black after
Amex shares dropped 84 cents or 2.5% to $33.42 after it announced its profits would come in at the bottom end of expectations and it would cut another 7,700 jobs, bringing to roughly 14,000 the number of jobs it has eliminated this year. The total cuts represent 15% of its workforce. Amex, which urges its customers not to leave home without their credit cards, operates the biggest travel agency catering to US companies.
'Travel is weak and likely will stay weak for quite a while,' Moshe Orenbush, an analyst at CS First Boston, said. 'American Express is not taking the bulk of the expense savings to the bottom line. And credit is worsening, which will be a further drag on earnings in 2002.'
Analysts said the early sell-off inspired by Amex underscored the company by company focus on profits as the US struggles to lift itself from a recession which began officially in March. Procter & Gamble, which makes Tide clothes detergent, Pampers nappies and Pringles potato chips, said it was surpassing sales expectations and investment Lehman upgraded its shares. P&G shares climbed $3.25 or 4.2% to $79.95.
Merck, the world's third biggest pharmacuetical company, dipped $2.18 or 3.6% to $58.52, adding to Tuesday's 9% slide on news that its profits would be flat next year. Among techs, Microsoft added 63 cents or 0.9% to $67.95, Intel gained 89 cents or 2.7% to $34.08 and IBM rose $1.70 or 1.4% to $123.20. Semiconductor maker Applied Materials climbed 93 cents or 2.1% to $44.87, but after the close of trading it said it was cutting 1,700 jobs or 10% of its payroll to cope with slowing orders.
Among Dow components, do-it-yourself leader Home Depot tacked on 38 cents or 0.8% to $48.35. Alcoa, the aluminium maker, lost 71 cents or 1.8% to $37.82. Calpine, the independent energy producer, plunged 35% on fears it might face off-balance sheet liabilities similar to that confronting Enron, the energy trader which filed for bankruptcy two weeks ago. But Calpine denied that it was harboring any surprises and Standard & Poor's re-affirmed its credit rating. Calpine shares finished the day up 41 cents or 2.7% to $15.9. Enron shares fell six cents or 8.3% to 66 cents, down from $84 a year ago.
