Stocks Pummeled by Dismal Earnings, Outlooks

NEW YORK – Stocks extended their losses Tuesday, with the Dow Jones industrial average tumbling by triple digits for a second day, as investors were hit by a new batch of gloomy news from the likes of corporate giants Lucent Technologies, Exxon Mobil and AT&T Corp.

``The earnings news is not really improving,'' said Paul Cherney, analyst at S&P Marketscope. ``I still think that the lows are in (in the stock market), its just that we can't get the engines started for a real advance.''

Federal Reserve Chairman Alan Greenspan was also in the spotlight as as U.S. senators grilled the Fed chief on economic issues. In testimony before the Senate Banking Committee, he reiterated his cautious view of the economy and left the door open for further interest rate cuts.

The Dow Jones industrial average finished the day down 183.30, or 1.8 percent, at 10,241.12, according to preliminary calculations. The Dow more than doubled its 152-point loss of Monday.

The market's broader indicators also ended significantly lower with the Nasdaq composite index falling 29.32 to 1,959.24, a 1.5 percent loss, and the Standard & Poor's 500 index declining 19.38, or 1.6 percent, to 1,171.65.

``It's a horrible market,'' said Rich Levy, head of block trading at CIBC World Markets Inc. ``No one's buying into this thing. People are tired of loosing money, so they're pulling out.''

Wall Street, awash in corporate results in the busiest week of the reporting period, was hit early by dismal news from market bellwethers AT&T and Lucent.

Lucent, the most heavily traded on the New York Stock Exchange, fell $1.48 to $6.42 -- a drop of more than 18 percent -- after announcing it lost 35 cents a share in its fiscal third quarter, wider than the 21-cent loss analysts expected.

The struggling telecom firm also announced plans to cut another 15,000 to 20,000 jobs and eliminate its dividend in an effort to return to profitability.

``When Lucent announces a layoff on top of previous layoffs, it shows there are more recession-type strategies being used for survival purposes,'' said Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $720 billion.

Long-distance telephone and cable-television giant AT&T posted a 92 percent drop in profits amid stiff competition and weak prices in the long-distance phone market, and warned third-quarter revenues may fall. Its shares fell 61 cents to $19.44.

Also, Amazon.com Inc. helped lead the Nasdaq lower after the online retail giant said sales could slow further. The company posted a smaller loss than expected, but its revenues disappointed. Amazon fell more than 24 percent, or $3.97 to $12.06.

In Washington, Greenspan echoed comments he made to the House Financial Service Committee last Wednesday during the first part of his twice-yearly testimony on monetary policy, saying that the economy may not be out of the woods yet and noted economic indicators had turned from ``persistently negative to more mixed.''

The central banker also hinted the Fed was open to the idea of further interest rate cuts to shore up the economy on top of the six rate reductions that the Fed has engineered so far this year, bringing overnight rates to a seven-year low of 3.75 percent.

As Senators grilled him on economic issues, Greenspan said changes in monetary policy are still able to lift the economy, although it has remained in its slump after the Fed's aggressive rate-cutting. He also said that all signs indication inflation remains tame.

But his comments offered no relief from the persistent stream of lackluster earnings that have battered Wall Street in the past two weeks.

Aside from AT&T and Lucent, results poured in from blue-chip giants like Exxon Mobil Corp. and the world's largest restaurant company McDonald's Corp.

Exxon, the No. 1 U.S. oil company, posted higher earnings, thanks to lofty crude oil and natural gas prices and robust profits from refining, but its results missed expectations. The Irving, Texas, company is facing the prospect that over the coming quarter earnings won't show the more increases. Its shares dropped 70 cents to $41.80.

McDonald's gained 62 cents to $28.39 after reporting profits that came in line with Wall Street's forecasts, even as a strong U.S. dollar and lingering concerns over mad cow disease hurt earnings.

Wireless technology company Qualcomm Inc. slumped $3.10 to $57.75 after saying it was scrapping plans to spin off its semiconductor business and announced a business realignment and management shake-up, replacing Chief Operating Officer Richard Sulpizio.

Corporate profits could still stage a sharp rebound by early next year, but for now Wall Street will continue to be slapped by profit warnings as the U.S. economy struggles out of its slump, said Tom Sparico, managing director of equities at Bengal Partners in Stamford, Connecticut.

``You can't get to that point ... until you see business getting healthy and its just not there,'' Sparico said. ``We're still working off the excesses of the bubble.''

Declining issues outnumbered advancers more than 7 to 3 on the New York Stock Exchange. Volume came to 1.20 billion shares, ahead of the 970.88 million shares traded Monday.

The Russell 2000 index, the gauge of smaller company stocks, fell 8.44, or 1.8 percent, to 474.26.

Overseas markets were mixed Tuesday. Japan's Nikkei stock average finished the day up 2.4 percent. In Europe, however, Germany's DAX index fell 2.0 percent, France's CAC-40 declined 1.2 percent and Britain's FT-SE 100 lost 1.6 percent.

-- The Associated Press and Reuters contributed to this report.