Wall Street miffed that companies still can't say business is

NEW YORK -- It didn't matter that Intel, Microsoft and IBM beat earnings expectations this past week. Stocks still dropped, because the high-tech bellwethers couldn't give Wall Street what it really wants -- word that the long-awaited business turnaround is on the fast track.

"It has cast a doubt on the speed of the recovery. Investors were calling for a quick recovery. And, when something puts that in doubt, the market is going to come back down," said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky.

The murky forecasts from the biggest names in the tech business were particularly disheartening for investors who snapped up stocks late last year amid growing optimism about an economic recovery during the first half of 2002.

Now, with companies saying business won't pick up that fast, "Boom! Investors take profits," Dickson said.

Analysts predict choppy trading for the rest of January, and that individual earnings reports and projections could move the market in either direction on any given day.

"The market is shifting more to a stock-by-stock emphasis, rather than focusing on macro events," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray.

Belski continued: "Individual stocks are going to have a bigger effect going forward, because the last two or three weeks have been dominated by macro things like this economic report or that economic report."

Proof of a single stock's power on Wall Street was apparent Wednesday when Intel released a hazy forecast, saying it wouldn't be able to judge demand for another four or five weeks. The chipmaker helped push the Dow Jones industrial average down 211.88, or 2.1 percent, to 9,712.27, its lowest close in 1 1/2 months.

While investors are eager to hear good news in company reports, they're also growing skeptical of them -- due to the Enron debacle -- and that has also pressured the market, analysts said.

"What worries Wall Street a great deal is whether earnings reports can be trusted, and whether or not anyone really knows when the economy will turn around," said Alan Ackerman, executive vice president of Fahnestock & Co.

This past week, Enron and its auditor Arthur Andersen tried to blame each other for allowing questionable accounting practices to continue and push Enron into bankruptcy.

The Securities and Exchange Commission said the Enron situation has hurt investor confidence, because it is just the latest in a series of accounting failures at big companies. SEC Chairman Harvey Pitt on Thursday called for a new private sector agency to regulate the accounting profession.

"The need for change cannot be ignored any longer," Pitt said. "Restoring the public's confidence in the accounting profession" is the primary goal.

But even as it appeared that investors had plenty of reasons to unload stocks this past week, some analysts warned against reading too much into the decline. They said the market still had room for some giveback, having risen substantially from the Sept. 21 lows that followed the terror attacks.

"If things are bottoming out in the economy, and I believe they are, it goes back to valuations being high. Investors have discounted a pretty good near-term recovery," said Larry Rice, chief investment officer at Josephthal & Co.

Rice said investors remain confident that a turnaround will soon take place. But when faced with a stream of bad news this past week, they were compelled to take some profits.

"There's still a lot of optimism out there," Rice said.

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