Share prices were lower on the DJIA in early trade, accelerating losses on the back of weaker-than-expected consumer sentiment, prompting fears the US economic recovery may be faltering, with a profit warning from Honeywell weighing heavily, dealers said.
The Nasdaq, however, edged back into positive territory as chip and PC stocks held up well, offsetting a profit warning from Lucent, they said.
At 3.24 p.m. the DJIA was down 75.73 points at 8,303.68, the S&P 500 was 1.28 lower at 885.63 while the Nasdaq composite was up 5.05 at 1,284.73.
The Dow extended losses seen yesterday on a raft of disappointing corporate and macroeconomic news, including a disappointing reading on consumer sentiment from the University of Michigan, which offset earlier positive data including gains in retail sales, dealers said.
Investors were further unsettled by US media reports that police in southern Florida detonated a suspicious package in a car early today and detained three men there in response to a warning of a potential terrorist attack.
The negative tone to opening trade was set overnight by Honeywell, which said it expects to post third-quarter ongoing earnings of 50-52 cents a share, falling short of the current First Call/Thomson Financial consensus EPS estimate of 60 cents.
Honeywell slumped $4.49 or 15.84 per cent to 23.85 and dragged other defence and aerospace companies lower as investors worried about earnings prospects for the sector.
Raytheon was down 0.17 at 35.50, Rockwell was off 0.63 at 17.47 while Lockheed Martin was 0.47 lower at 65.51.
Boeing meanwhile dropped 0.67 to 35.78 ahead of the result of a ballot by the machinists' union, the IAM, on possible strike action.
In the telecoms sector, Lucent fell $0.14 or 8.48 per cent to 1.51 after after the company warned of a much bigger fourth-quarter loss than the market was expecting, blaming the result on the weak market and uncertain consumer spending trends.
Other network companies saw mixed trade on the back of the Lucent profit warning with Cisco up 0.03 at 13.07 while Motorola fell 0.02 to 11.67 and Juniper Networks was 0.18 lower at 6.81.
Chip stocks were broadly higher with Intel up 0.32 at 16.02 and Texas Instruments 0.14 higher at 19.35.
Retail stocks received a boost from the latest retail sales data with Wal-Mart up 0.22 at 53.34 and Sears 0.22 higher at 44.96.
Among other stocks, GE was down 0.74 at 27.27 after the New York Times reported the conglomerate had been subpoenaed for its records of the retirement package granted to retired chairman and chief executive John Welch, as part of an attempt by attorneys for Welch's estranged wife to secure a large amount of alimony in their divorce case.
PA