Mixed Signals on Wall Street; Gold Prices Fall

Wall Street struggled to a mixed finish Wednesday, unable to sustain Tuesday’s midday turnaround amid fresh earnings warnings from major companies.

Meanwhile, gold prices pulled back, oil rallied, bond yields edged up and the dollar continued to rebound, reaching nearly 107 yen.

In the stock market, the Dow Jones industrial average lost 62.05 points, or 0.6%, to 10,213.48, its lowest level since April 9.

The Nasdaq composite fell 0.9% to 2,730.27, its lowest since Aug. 30, as major technology stocks headed down again.

The Standard & Poor’s 500 fell 1.1%, bringing its decline from its July 16 record high to 10.6%--meaning blue-chip stocks are officially in a “correction.”

Yet rising stocks narrowly outnumbered losers on the New York Stock Exchange in continued heavy trading. Losers had the edge on Nasdaq.

With one day left in the third quarter, Wall Street sentiment seems strangely split: On the one hand, investors continue to sell many big-name consumer products stocks and major tech shares on concerns over high valuations.

At the same time, many Internet stocks--perhaps the highest-risk stocks of all in terms of share-price valuations--are in demand again.

Amazon.com, for example, rocketed $14.88 to $80.75 on Wednesday as it broadened its Internet storefront. Also rising were DoubleClick, up $2.56 to $116.38; Go2Net, up $3.63 to $66.69; and Verticalnet, up $3.13 to $36.25, among other Net shares.

But IBM dived $3.44 to $120.06, leading a broad sell-off in many tech stocks, after Merrill Lynch removed the stock from its list of 10 top stock picks--and replaced it with an Internet stock, software testing firm Mercury Interactive. Mercury surged $3.75 to $62.50.

Merrill, which has had some concerns about IBM’s hardware sales growth, said it still recommends IBM stock and did not change earnings estimates.

Among consumer products stocks, Avon Products tumbled $9.88 to $25.81 after the cosmetics firm said fourth-quarter earnings will fall short of forecasts because of weaker currencies in Latin America and surprisingly slower U.S. sales.

Also plummeting was Gillette, down $3.56 to $33.44--its lowest price since 1996--after the razor giant said it will meet third-quarter earnings estimates, but that sales will be below estimates because of falling demand for Braun electric shavers and Paper Mate pens.

That caused many analysts to cut fourth-quarter earnings estimates.

Still, Wall Street strategists expect third-quarter earnings for most blue-chip companies to be strong. Optimists believe that healthy earnings reports, a rebounding dollar and a restrained Federal Reserve--which is widely expected to leave interest rates alone when policy makers meet Tuesday--could bring buyers back to stocks soon.

Among Wednesday’s highlights:

* In commodity trading, gold’s rally paused, with near-term futures sliding $7.40 to $300.60 an ounce. Gold stocks also fell. Barrick Gold slumped $1.56 to $22.31, and Placer Dome slid 81 cents to $14.88.

But energy shares rose as crude oil futures traded as high as $25.12 a barrel in New York, then closed up 36 cents at $24.69. Baker Hughes surged $1.38 to $28.75; Anadarko Petroleum rose $2 to $31.

* Major tech stocks sliding included Hewlett-Packard, off $5.94 to $89.25; Microsoft, down $2.63 to $89.50; and Texas Instruments, down $2.31 to $84.19.

* Consumer products shares falling with Gillette and Avon included Procter & Gamble, down $3.13 to $95.81; Colgate-Palmolive, down $2.94 to $46.06; and Clorox, down $2.69 to $37.81.

Also, Coca-Cola fell $1.88 to a 52-week low of $48.88 after saying it fired 40% of its Moscow staff to cut costs.

* Among Internet-related new stock issues, InterNAP Networks (ticker symbol: INAP) rocketed $32.98 from an issue price of $20 to close at $52.98. Also, NetSolve (NTSL) rose $6 to $19. But ShopNow.com (SPNW) rose just 69 cents to $12.69.

Foundry Networks, which Tuesday rocketed 525% from its issue price, fell back $26.25 to $130.

Market Roundup, C14