NEW YORK -- U.S. stocks fell yesterday, pushing the Dow Jones industrial average to its biggest drop in five weeks, as more investors bet that third-quarter company earnings will fall below expectations.
Television video retailer Movie Gallery Inc., oil exploration company Landmark Graphics Corp. and women's clothing store Charming Shoppes became the latest companies to announce that their third-quarter sales or earnings will fall short of analysts' estimates.
The Dow Jones industrial average fell 27.82, to 4,761.26, on the first day of the fourth quarter, its biggest drop since a 35.57-point decline Aug. 23. For the third quarter, the average gained 5.11 percent -- its worst performance since last year's fourth quarter, when it fell 0.22 percent.
Losses in Caterpillar Inc., United Technologies Corp. and DuPont Co. shares fueled the decline.
Computer software and semiconductor companies, which have posted the strongest profit growth this year, may endure the most disappointments because analysts have expected their robust growth to continue.
Yesterday, a decline in technology shares weighed stocks down as Microsoft Corp. shares dropped $2.25, to $88.25, and Computer Associates International Inc. slid $1, to $41.25. Software, telecommunications and semiconductor shares led the broader Standard & Poor's 500 index down 2.69, to 581.72, countering gains in drug, electric utility and photographic company shares.
The technology-heavy Nasdaq composite index slipped 15.95, to 1,027.59, posting its biggest drop since July 19, when it plunged 35.7. Microsoft, Intel Corp. and Cisco Systems Inc. fell, tempering gains in U.S. Healthcare Inc., Nextel Communications Inc. and Tele-Communications Inc.
Shares of so-called cyclical companies -- those most affected by economic trends -- were the hardest hit yesterday.
Among the ones that fell, Caterpillar shares dropped $1.50, to $55.375; DuPont's stock fell $1.50, to $67.25; and United Technologies weakened $1.625, to $86.75. The losses pushed the Morgan Stanley Cyclical Index down 2.17, to 345.04, erasing all of last week's gains.
Sears, Roebuck & Co. shares led a slide in retail shares, slipping 87.5 cents, to $36. Many analysts said consumer spending may slow in the months ahead because wage and unemployment growth have been sluggish.
Slowing sales already have hurt retail shares. The S&P; retail stores index was down 0.65, to 50.69, yesterday.
Charming Shoppes said it expects to post a loss of 20 cents to 30 cents because of sluggish sales. Analysts polled by First Call Corp. expected the company to lose about 2 cents a share. The retailer's shares were the most actively traded on U.S. exchanges, weakening $1.28125, to $3.21875.