NEW YORK -- Most U.S. stocks slid for a second day yesterday as investors questioned whether third-quarter corporate earnings will meet expectations.
Auto, paper and chemical stocks -- including Chrysler Corp., Georgia-Pacific Corp. and DuPont Co. -- led the decline.
Profits have surpassed expectations for the past 10 quarters in a row, going back to the fourth quarter of 1992. Given the delay between an economic slowdown and its effect on earnings, earnings will soon start to reflect the weak growth in the second and third quarters, analysts said.
The Dow Jones industrial average dropped 11.56, to 4,749.70, after briefly tumbling as much as 45.16 yesterday. Aluminum Co. of America, Boeing Co., Union Carbide Corp., General Motors Corp., DuPont, International Paper Co. and United Technologies Corp. all slipped one point or more.
The Standard & Poor's 500 index rebounded to close 0.62 higher, at 582.34, while the technology-laden Nasdaq composite index fell 7.12, to 1,020.45.
Declining stocks outnumbered advancing issues by more than 13 to 9 on the New York Stock Exchange, where volume rose to 385.9 million shares, up from 357.2 million yesterday.
For a third straight day, stocks lagged a rally in government Treasury bonds.
And investors heard from at least seven more companies that warned earnings will fall beneath expectations in the latest quarter. Network Peripherals Inc., for instance, plunged $5.875, to $10.125. The maker of local area networks for computers said earnings would be 9 cents a share, half of analysts' estimates.
Profit warnings also came from TGV Software Inc., which closed $5 lower at $10.75; Systems & Computer Technology Corp., down $6.50 at $19.625; Crompton & Knowles Corp., $1.25 weaker at $13.25; Sturm, Ruger & Co., down $2.25 at $28; Arden Industrial Products, $2.50 lower at $5.75; and Concentra Corp., down $1.50 at $9.25.
The Russell 2000 index of small-company stocks eased 2.99, to 304, and the Wilshire 5000 index dropped 8.19, to 5,763.86.
Companies with businesses closely tied to economic growth sank for a third day. Of the 30 stocks in the Morgan Stanley cyclical index, Motorola Inc. fell $1.625, to $74.875; International Paper eased $1, to $40.125; Alcoa dropped $1.875, to $50.50; Mead Corp. slid $1.375, to $56.875; and CSX Corp. dropped $1.375, to $83.
The cyclical index dropped 3.68, to 341.36. Morgan Stanley's consumer index of stocks that make steady-growing consumer staples climbed 2.24, to 265.79.
The economic slowdown that occurred in the second and third quarters this year will soon show up in weaker sales and earnings at many companies, analysts said.
"Everybody is worried about third-quarter earnings," said Guy Truicko, money manager at Unity Management in Lake Success, N.Y., which manages $1 billion in assets.
GM declined $1.25, to $45.375, after it and Chrysler reported weaker-than-expected September sales. Chrysler slumped $1.875, to $51.375.
Utility shares rallied for a second day as falling Treasury yields lowered their financing costs. The Dow Jones utilities average of 15 stocks gained 1.18 to 216.58, its highest point since February 1994.
The yield on the Treasury's benchmark 30-year bond dropped to 6.45 percent, from 6.48 yesterday.
Transportation stocks suffered after USAir Group Inc. said late yesterday that it may sell itself or form an alliance with AMR Corp., parent of American Airlines, or UAL Corp., owner of United Airlines.
USAir climbed $1, to $12.625; AMR dropped $2.125, to $68.50; and UAL dived $6.125, to $166.625.
The Dow Jones transportation index dropped 28.79, to 1,925.23.
On overseas stock markets, Britain's FT-SE 100 index gained 0.11 percent; France's CAC 40 added 1.12 percent, and Germany's DAX Index climbed 0.82 percent. In Japan, the Nikkei 225 Index surged 2.27 percent, to 403.15.