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Fully erasing yesterday's gains, and plus some, the indices extended their fourth quarter declines. A plummeting pair of shares - Pfizer (PFE 21.93 -2.04) and eBay (EBAY 39.68 -2.33) - set the market's early tone and shoved buyers back to the sidelines. While the drug giant delivered Q3 earnings that exceeded expectations by $0.03 per share, its downside FY05 guidance and withdrawal of full-year 2006 and 2007 forecasts sent shares tumbling nearly 9%. eBay, meanwhile, had reported EPS in-line with estimates lat night, but its Q4 and FY05 outlooks sent the stock reeling. Fixated upon the duo of disappointing guidance, traders again overlooked a solid slate of third quarter reports and failed to find momentum in another round of sharp energy price pullbacks. While leadership was lackluster over the course of the session - dominated by the market's least-influential Telecommunications sector (-0.6%) - selling pressure intensified late in the session and left each of the ten sectors with losses. On account of SBC's (SBC 22.54 +0.13) upside earnings report, the Telecom sector managed to fare best today. The Dow component's rise, paired with a gain in Analog Devices (ADI 35.25 +2.07), which raised its Q4 guidance, helped limit the Tech sector's (-0.8%) slide. Ultimately, though, it could not counter across-the-board declines. Joining SBC in helping to support the blue chip average was Coca-Cola (KO 24.08 +0.28), which stood strong all day after beating Q3 estimates. Despite its contribution, the Consumer Staples sector fell 0.8%, as every issue sans Coca-Cola finished in the red. UPS (UPS 72.44 +1.61) enjoyed a respectable upside earnings-related gain that helped the Industrials sector, but more broad-based pressure left the sector 1.1% lower. A particular weak spot was Southwest Airlines (LUV 15.07 -0.51), which dropped 3.0% after the company reported 91% earnings growth and beat Q3 estimates by $0.03. Declining energy prices and an upgrade-induced rise in Home Depot (HD 39.57 +0.31) could not offset eBay's effect on the Consumer Discretionary sector (-1.2%). Disappointing earnings growth at McDonald's (MCD 32.40 -1.29) only made matters worse. Allstate's (ALL 53.02 -1.38) Q3 disappointment sent insurance issues lower, and helped push the Financials sector to a -1.0% close. Better than expected earnings from Rohm & Haas (ROH 42.10 +1.21) helped support Materials (-0.8%), but widespread weakness left the sector submerged. Further profit taking left the Utilities sector 2.6% lower today. The Pfizer effect catalyzed Healthcare's (-2.2%) session-long laggard status and Amgen's (AMGN 74.10 -3.99) guidance-related slide helped to sink the sector. Reacting to the slide in energy prices, the Energy sector plummeted 4.1% and weighed heaviest on the market. Following a better than expected inventory report from the EIA yesterday, today's report that natural gas supply rose 75 bcf to 3062 bcf, well ahead of the expected 55 bcf rise, exacerbated selling within the sector. With respect the session's economic data, last week's decline in initial claims - to 355K (consensus 365K) versus the prior week's 390K - was largely overlooked, as was Sept. leading indicator data (-0.7% vs. -0.5% consensus) and the Oct. Philadelphia Fed index (17.3 vs. 10.0 consensus). At the same time, the bond market fared better today, but prolonged attention to the flattening yield curve and stirring inflation fears continued to weigh on investors' minds and helped prevent spirited buying activity in the equity market.NYSE Adv/Dec 823/2455, Nasdaq Adv/Dec 947/2039
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