updated 4/8/2004 8:21:21 AM ET 2004-04-08T12:21:21

Investors lost a little more of their optimism about first-quarter earnings Wednesday, sending stocks sliding on a disappointing profit report from Alcoa Inc. and a warning from Seagate Technology.

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With many people away for the Passover and Easter holidays and no trading scheduled for Good Friday, volume was light, exaggerating some of the price moves. Investors who remained seemed chilled by the latest corporate news, and concerns about inflation, rising interest rates and intense fighting in Iraq added to the day’s weakness.

Despite the retreat on Alcoa’s announcement, analysts were upbeat about the market’s long-term prospects, particularly after the major indexes regained so much of the ground lost in last month’s correction. Few attached great significance to the stock skid.

“I think you’re getting normal hesitation here before we attempt to attack the recovery highs,” said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn. “We have a solid foundation, the economy is strong, profits are rising, interest rates are low. ... I’d look at this market as a big tanker ship that is just taking some time to turn. One news item is not going to curtail that.”

The Dow Jones industrial average slipped 90.66, or 0.9 percent, to 10,480.15.

The broader gauges were also lower. The Nasdaq composite index lost 9.66, or 0.5 percent, to 2,050.24. The Standard & Poor’s 500 index shed 7.63, or 0.7 percent, to 1,140.53.

“What we need is a first-quarter earnings surprise to the upside, something that’s not already priced in ... to push us higher,” said David Hegarty, head trader at Commerzbank Securities. “But in the meantime we’re stuck in a range on the S&P.”

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A downbeat profit outlook from Nokia pressured prices for a second straight session, doing little to help investors regain their confidence about first-quarter results. Still, companies within the S&P 500 are expected to report 17 percent earnings growth on average, according to Thomson Financial. Some anticipate an average rise of up to 20 percent.

Another potential factor in the decline may be that investors are starting to consider the implications of last Friday’s strong employment reading, and the prospect of rising interest rates. Markets don’t absorb such changes with “computer speed,” said Tracy Herrick, chief investment strategist at Jefferies & Co.

“I think investors still feel very good about earnings growth, that hasn’t changed,” Herrick said. “But that doesn’t mean so much anymore because the present value of those earnings would be discounted in a rising rate environment.”

Alcoa, the world’s largest aluminum producer, fell $1.85, or 5.1 percent, to $34.65 after it failed to meet Wall Street expectations with results released after the market closed Tuesday. The first Dow component to report earnings, Alcoa’s profits doubled in the first quarter, but missed analysts’ estimate by a penny a share.

Seagate shed 61 cents to $14.98 after the hard disk drive maker dramatically cut its quarterly earnings estimate on weakening demand. A number of brokerage firms lowered its ratings on the news.

Nokia, the world’s biggest cell phone maker, lost 29 cents to $16.92 after investors filed a class action suit Tuesday accusing the company of securities fraud related to its first-quarter forecast. Nokia dropped 19 percent Tuesday after issuing a gloomy outlook.

Taser International Inc. surged $5.79, or 5.6 percent, to $98.04, as investors shrugged off a recent report from CBS News that suggested its stun guns, used by police to disarm suspects, had been linked to a number of deaths. Officials with the company, which is planning a stock split later this month, say the device is not dangerous.

Declining issues were about even with advancers on the New York Stock Exchange. Volume was at 1.46 billion shares, compared with 1.40 billion on Tuesday.

The Russell 2000 index, which tracks smaller company stocks, up 2.31, or 0.4 percent, at 601.64, after staying in negative range for most of the day.

Overseas, Japan’s Nikkei stock average finished 0.5 percent lower Wednesday. In Europe, France’s CAC-40 closed down 0.3 percent, Britain’s FTSE 100 declined 0.1 percent and Germany’s DAX index shed 0.5 percent.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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