Inflation Worries Trump Good Earnings

Stocks fell Tuesday after higher than expected inflation data was released. Not even good earnings reports from several Dow components could lift the markets. A large block of ExxonMobil which traded mid-day further helped send the market lower.

The PPI for September soared 1.9%, higher than expected and the fastest pace in 15 years; the rise reflected the rise in energy prices following the Gulf hurricanes. Ex-food/energy, the PPI came in at +0.3%, and +2.6% for the year, also higher than expected.

At 1:00 PM, a 24 million share block of ExxonMobil (XOM | Quote | Chart | News | PowerRating) was put up for sale. The block, worth $1.4 billion, was picked up by Goldman Sachs $1 lower, which sent oil stocks--and the overall market--lower.

Three large Dow components beat consensus earnings before the bell today:

3M (MMM | Quote | Chart | News | PowerRating) reported 1.12, beating estimates by 0.04, and raised the lower end of its guidance for the year. Profits rose 10%. The company also authorized an additional $300 million stock buyback.

United Technologies (UTX | Quote | Chart | News | PowerRating) reported 0.81, beating by 0.02, and issued upside guidance for FY 2005. (story)

IBM (IBM | Quote | Chart | News | PowerRating) reported $1.26, beating by 0.13. Net income was also strong, but revenues were light at $21.53 billion.

Trader talk: Rising costs have been an issue for many companies. La-Z-Boy (LZB | Quote | Chart | News | PowerRating) (story), Cooper Tire (CTB | Quote | Chart | News | PowerRating) and American Standard (ASD | Quote | Chart | News | PowerRating) all issued warnings, citing higher costs.

Merrill Lynch (MER | Quote | Chart | News | PowerRating) reported 1.40, well ahead of the 1.18 estimate. Revenues increased 38% to $6.7 billion.(story)

International Paper (IP | Quote | Chart | News | PowerRating) was raised to a buy at UBS.

Johnson & Johnson (JNJ | Quote | Chart | News | PowerRating) beat by a penny but revenues were light. (full story)

San Francisco Fed President Janet Yellen said steady rate hikes are the Fed's best policy to fight inflation and that the main risk to the economy is high housing prices.

After the close, Intel (INTC | Quote | Chart | News | PowerRating) missed by a penny at 0.32.  Yahoo (YHOO | Quote | Chart | News | PowerRating) beat by 0.02.  Motorola (MOT | Quote | Chart | News | PowerRating) beat by 0.02. Ryland (RYL | Quote | Chart | News | PowerRating) beat by 0.18 and gave upside guidance. Kraft (KFT | Quote | Chart | News | PowerRating) missed estimates by 0.04 but beat on revenues; Q3 profit fell 14%. The stock was halted after the close. Gilead (GILD | Quote | Chart | News | PowerRating) beat by a penny.

The CBOT prices tonight--3.2 million shares between $45-$49. Symbol: BOT.

The NYSE de-listed Refco (RFX), which filed for bankruptcy--the fourth largest ever. New symbol: RFXCQ.

Strong sectors were:   Airlines (XAL | Quote | Chart | News | PowerRating) +0.96%       Biotech  (BTK | Quote | Chart | News | PowerRating)  +0.08%     

Weak sectors were:   Oil Services (OSX | Quote | Chart | News | PowerRating)  -4.48%     Oil (XOI | Quote | Chart | News | PowerRating) -4.08%       Natural Gas (XNG | Quote | Chart | News | PowerRating)  -3.79%    

More stocks on the move:

Wells Fargo (WFC | Quote | Chart | News | PowerRating) beat by a penny.

Novellus (NVLS | Quote | Chart | News | PowerRating) was in-line; margins were slightly lower than expected. Net income fell 64%

Rambus (RMBS | Quote | Chart | News | PowerRating) beat by 0.02, ex-items, with quarterly earnings rising almost 40%; revenues also beat estimates.

Brice Wightman