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Stocks edge lower on profit concerns

22/04/2008 - 15:27

By Kristina Cooke

NEW YORK (Reuters) - Stocks fell on Tuesday, after disappointing outlooks from microchip maker Texas Instruments Inc and health insurer UnitedHealth Group Inc heightened concerns about the health of the economy.

In addition, reduced profit projections by brokerages for Bank of America Corp pressured financial stocks.

Texas Instruments said its second quarter would be weaker than expected due to an uncertain economic situation and cited customer caution and weak demand for high-end cell phones. The company's shares fell 4.5 percent to $29.20.

Meanwhile, UnitedHealth Group Inc posted a lower-than-expected first-quarter profit, hurt by weakness in its business serving employers and slashed its full-year earnings forecast. Its shares fell 10.3 percent to $33.91.

"People are looking at (earnings) outlooks. They're worried about the economy. I think you need to see outlooks pick up, and that will help the market come back," said Giri Cherukuri, head trader at Oakbrook Investments LLC in Lisle, Illinois.

The Dow Jones industrial average <.DJI> was down 61.72 points, or 0.48 percent, at 12,763.30. The Standard & Poor's 500 Index <.SPX> was down 7.26 points, or 0.52 percent, at 1,380.91. The Nasdaq Composite Index <.IXIC> was down 15.30 points, or 0.64 percent, at 2,392.74.

Another Dow component, McDonald's Corp , posted quarterly profit above expectations, boosted by strong overseas sales. But its shares fell 0.2 percent to $58.56, as the company also said sales fell slightly in March at U.S. restaurants open at least 13 months.

Shares of BJ Services Co fell 13.8 percent to $28.29 after the oilfield services company posted weaker-than-expected quarterly profits hurt by lower prices in the company's key North American market.

Gains in coal companies helped keep losses in check, however. Peabody Energy Corp's shares rose 1.6 percent to $69.92, after the world's largest coal producer raised its full-year forecast.

Shares of Peabody's rivals were also up. Foundation Coal shares rose 1.2 percent to $65.58, while International Coal Group stock gained 7 percent to $9.06.

In economic news, the National Association of Realtors said the pace of existing home sales in the United States fell 2 percent in March, in a report that showed the U.S. housing market continues to struggle.

(Editing by James Dalgleish)


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