Blue-chip stocks ended sharply lower yesterday as Wall Street worried over the next quarterly earnings of computer giant International Business Machines.
The Dow Jones Index registered its biggest drop since mid-August, a fall of 1.69 per cent. The Nasdaq composite index fell 16.96 points to 1,639.26, snapping three straight sessions of record closes.
In the broader market, declining issues swamped advances 17-10 on active volume of 521 million on the New York Stock Exchange.
Goldman Sachs & Co. ignited the sell-off after it estimated that IBM will earn 10 cents a share less than expected in the third quarter due to foreign exchange factors.
"A big chunk of these losses is IBM . . . today is part of a rolling correction in big stocks that have become overpriced, based on too-rosy earnings forcasts," said Mr Thom Brown, managing director of Rutherford Brown & Cather wood.
The downward revision in the brokerage house's estimate of IBM earnings cast a chill over the broader market, derailing technology stocks and small-name stocks, which had been steaming ahead to new peaks.
The market has also been dogged by continuing signs of surprising strength in the economy that pose inflationary risks and have made it less certain the Federal Reserve will not try to slow things down with higher interest rates.
