Wall Street is now worrying about the companies usually seen as safe havens. After an early rally Wednesday, investors succumbed to their concerns about disappointing earnings at Kraft Foods Inc. and the market ended the day with a sizeable loss.
Fourth-quarter numbers from Walt Disney Co. and Time Warner Inc. added to the market's foul mood.
The Dow is down 121 at 7,956. The S&P 500 index is down 6 at 832. The Nasdaq composite index fared better, falling just 1 to 1,515. The losses follow a rally Tuesday.
Losing stocks outnumbered gainers by 3 to 2 on the New York Stock Exchange, where volume came to 1.38 billion shares. Stocks turned mixed Wednesday afternoon, as early optimism over a reading on the service industry gave way to concerns over weak corporate earnings reports.
Weaker-than-expected fourth-quarter numbers from Kraft Foods Inc., Walt Disney Co. and Time Warner Inc. provided the latest reminder of the economy's struggles.
Wall Street showed some initial optimism Wednesday after a reading on the service industry offered the latest sign that the economy could be starting to heal some of its wounds. The Institute for Supply Management said the nation's service sector shrank in January at a slower pace than in December. Still, it was the fourth straight month that business activity in the industry contracted.
The trade association of purchasing executives said its index rose to 42.9 in January from a revised level of 40.1 in December. Analysts had expected a reading of 39, according to a survey by Thomson Reuters. The ISM's report on the manufacturing sector, issued Monday, similarly came in above expectations even as it signaled continuing weakness.
The service data came as investors juggled several disappointing earnings reports with hopes that Washington would soon show further progress on its efforts to revive the economy. The Senate is getting closer to passing a $900 billion stimulus plan. Senators recently added money to the bill for medical research and tax breaks for car purchases. A similar plan has already cleared the House.
"The drivers this week are less corporate earnings, and more what we're hearing out of Washington, D.C.," said Arthur Hogan, chief market analyst at Jefferies & Co.
The administration also seems closer to figuring out a plan for the nation's ailing financial industry, he added. "There's a lot of buzz about a rescue plan and a fiscal stimulus plan that are proving to be market friendly," Hogan said.
In mid-afternoon trading, the Dow Jones industrial average fell 116.92, or 1.45 percent, to 7.961.44.
Broader indicators were mixed. The Standard & Poor's 500 index fell 6.72, or 0.80 percent, to 831.79, and the Nasdaq composite index rose 1.48, or 0.10 percent, to 1,517.78.
The Russell 2000 index of smaller companies fell 3.18, or 0.70 percent, to 449.72.
Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 788.9 million shares.
