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Tech stocks slide after Nokia warns

Stocks closed Tuesday’s lightly-traded session narrowly mixed, as investors took profits from the technology sector and waited for the onset of first-quarter earnings reporting season.
/ Source: staff and news service reports

Stocks closed Tuesday’s lightly-traded session narrowly mixed, as investors took profits from the technology sector and waited for the onset of first-quarter earnings reporting season.

The sell-off in technology stocks was blamed on cell phone giant Nokia, which warned Tuesday that its earnings would come in at the lower end of the expected range and said it had underestimated the public’s demand for less expensive cell phones.

U.S.-traded shares of Nokia plunged 18.6 percent to $17.21 on the New York Stock Exchange.

After sagging in the morning, the Dow Jones industrial average pared its losses in afternoon trading and finished the session with a gain of 12.44 points, or 0.1 percent, while the broader Standard & Poor’s 500-stock index ended 2.41 points lower, or off 0.2 percent.

But the Nasdaq composite index, which is full of technology stocks, spend the day mired in negative ground, finishing with a loss of 19.22 points, or 0.9 percent.

“What we’re seeing here, particularly on the Nasdaq, is reaction to the Nokia announcement,” noted Scott Wren, equity strategist for A.G. Edwards & Sons. “I tend to think this isn’t that big a deal, though. We still have some potential upside surprises in earnings going forward.”

Trading volume was thin, but the week’s action was expected to be uninspiring given the fact that the economic roster will be light this week and the U.S. stock market will close on Friday for the Good Friday holiday. “It’s a slow day and it’ll be slow week,” Eric Noll, head of research at Susquehanna International Group, told CNBC.

Analysts also said investors were holding fire ahead of the start of first-quarter earnings reporting season, which unofficially starts when aluminum giant Alcoa — always the first member of the Dow Jones industrial average to report — delivers its quarterly results.

After Tuesday's close, Alcoa said its net income for the quarter more than doubled, buoyed by higher aluminum prices. Earlier, its shares ended Tuesday's regular session up 1.7 percent at $36.50.

Stocks had posted impressive gains in five of the prior six sessions, with the Dow industrial average gaining 228.74 points, or 2.2 percent, since March 29. Analysts said it was only a matter of time before sellers would take advantage of the higher prices.

Despite Tuesday's sluggish session Peter Dunay, chief market strategist at Wall Street Access, said the market’s fundamentals remain sound, and that major worries of the past month — a weakened dollar, rising oil prices and a lack of job growth — have lessened over the past week.

However, the market remains susceptible to bad news from overseas, Dunay said.

“The only real concern I have is Iraq. The tensions seem to be getting worse and worse,” said Dunay. “The question starts to become, how bad will that situation be? I think this could fuel more terrorism events around the world should the situation persist, and that could hit us pretty hard.”

Black & Decker Corp. upped its quarterly earnings outlook by 20 cents per share, based on strong demand. The tool manufacturer, which will officially announce earnings April 20, saw its share price rise 2.4 percent to $59.38.

Shares of Kellogg Co., the cereal maker, rose 2.1 percent to $40.34 after it announced that its earnings per share would be 30 percent higher than a year ago. The company, due to release its earnings report April 22, also increased its full-year outlook.

Shares of Yahoo! Inc. fell 2.4 percent to $48.77 after the Internet company was downgraded from “buy” to “neutral.” The company is scheduled to announce its first quarter earnings after Wednesday’s session.

Declining issues outnumbered advancers by more than 7 to 5 on the New York Stock Exchange, where volume came to 1.07 billion shares, compared to 1.03 billion at the same point Monday.

Overseas, Japan’s Nikkei stock average closed Tuesday 1.0 percent higher. In Europe, Britain’s FTSE 100 closed down 0.2 percent, France’s CAC-40 fell 0.9 percent for the session, and Germany’s DAX index was down 0.6 percent in late-afternoon trading.

The Associated Press contributed to this report