NEW YORK - A warning from Hewlett-Packard about future growth and concerns about weakness in the banking sector Wednesday prompted investors to cash in profits following Wall Street's four-session advance.
Although investors know earnings and revenue in general will continue to be weak throughout this year, Hewlett-Packard's warning served as another reminder to remain cautious, analysts said.
The Dow Jones industrial average ended the session down 105.60 at 11,070.24. The Nasdaq composite index fell 15.93 to 2,217.73, and the Standard & Poor's 500 declined 13.54 to 1,270.03.
H-P fell $1.34 to $28.71, and weighed down much of the tech sector after CEO Carly Fiorina said the company experienced soft sales in May, in part due to a global technology slowdown that is expanding beyond the United States and Europe. The company now expects revenue to be flat or down 5 percent for its fiscal third quarter that ends July 31.
Declining issues outnumbered advancers slightly more than 3 to 2 on the New York Stock Exchange, where volume was 1.06 billion shares, compared with 1.11 billion Tuesday.
Fed member sees sluggish economy
WASHINGTON - Despite a push from five interest-rate cuts, the economy is likely to remain mired in a slowdown into the summer, Federal Reserve Board member Laurence Meyer suggested Wednesday.
Many economists are hopeful that the Fed's aggressive action will allow the economy, which began to weaken in the second half of last year, to skirt a recession this year. Some predict growth will pick up and the country will be on track for a healthy 2002.
Such a forecast is "reasonable" but there are still "some downside risks to that outlook," Mr. Meyer said in a speech to economists in New York. "There are no signs yet that the economy is strengthening relative to its first-quarter performance, and growth is likely to remain sluggish into the third quarter," he said.
Mr. Meyer also suggested there won't be any big boom when the economy does revive. He said, "It is unlikely that we will see a repeat of the exceptional performance from 1996 through mid-2000 on the other side of the slowdown."
GE prepares new Honeywell deal
BRUSSELS, Belgium - General Electric Co. is prepared to sell Honeywell International's regional jet-engine business to secure European Union approval for its proposed $41 billion purchase of Honeywell, a source close to the negotiations said Wednesday.
GE Chief Executive Jack Welch was expected to discuss the concession to EU regulators later this week in Brussels, according to the source who spoke on condition of anonymity.
EU regulators cited regional jet engines as one of their top concerns after launching an in-depth probe of the deal last March, saying the deal was "likely to significantly reduce the existing degree of competition in this market." The deadline is Tuesday for offering concessions.
Analysts said a sale of Honeywell's regional jet-engine business would have little impact on the deal since GE Aircraft is already the leader in that market, with top positions at three of the four manufacturers: Canada's Bombardier Inc., Empresa Brasileira de Aeronautica of Brazil; and U.S.-based Fairchild Dornier.