Wall Street: Tuesday close

A BARRAGE of negative news including rising oil prices, tech profit warnings and broker downgrades knocked shares. The Dow Jones Industrial Average retreated another 48.99 points or 0.5% to 10,313.71. But damage was heaviest in the Nasdaq Index, which dropped 58.21 points or 3.1% to 1804.40 in one of its weakest performances of the year.

Oil was at centre stage again as at least two major Middle Eastern oil-producing countries said petroleum should be used as a weapon against the US for its support of Israel in the ongoing Palestinian conflict. ExxonMobil, the country's biggest petroleum company, gained another 55 cents or 1.3% to $44.38 as oil prices touched seven-month highs.

Airline shares slumped as the higher cost of jet fuel was factored in to operating costs. AMR, parent of American Airlines, eased $1.54 or 6% to $24.02. UAL, the holding company for United Airlines, slipped $1 or 6.3% to $14.81.

Defence manufacturers were generally well supported, with Boeing closing up $1.17 or 2.4% to $49.09.

Analysts seemed to be in a grumpy post-Easter mood with Merrill Lynch's chief US investment strategist Richard Bernstein warning that markets remained in 'sell' territory. 'Valuation remains extraordinarily stretched and the supply of equity might constrain returns,' he said. 'Any stock market rally will probably be met by a flood of equity issuance and that such supply of equity will ultimately limit the overall market's upside potential.'

Goldman Sachs' top tech analysts weighed in with a pessimistic view of the prospects for an immediate profit rebound. Rick Sherlund, who follows Microsoft for Goldman, said he expected the world's biggest software maker to cut profit forecasts. He said techs 'had not participated yet' in the US economic recovery. 'If we don't start getting traction in the tech sector, numbers are going to have come down for a lot of other companies,' he said. Microsoft shares slumped $3.08 or 5.1% to $57.30.

Goldman also had negative things to say about Sun Microsystems, down 58 cents or 6% to $8.94, IBM, off $1.91 or 1.9% to $101.95 and EMC, lower by 38 cents or 3.1% to $11.82. Negative comments either from companies or analysts drove software maker Siebel Systems down $2.38 or 7% to $31.82. PeopleSoft, in the same sector, plunged $12.21 or 33% to $25.16 after it cut its projections.

Gemstar-TV Guide, a member of the News Corp. stable, tumbled $5.35 or 37% to $9.01 after analysts cited 'aggressive accounting' in the company's annual report released after the close of trading on Monday. News Corp. chairman Rupert Murdoch and son Lachlan sit on the company's board.

Pharmaceuticals maker Bristol Myers-Squibb shed $2.16 or 5.4% to $38.24 as it said inventories of drugs in the supply chain had reached 'significantly excessive levels'.

Among Dow components, American Express fell 33 cents or 0.8% to $39.86, Walt Disney lost 14 cents or 0.6% to $22.76 and General Electric was marked down 20 cents or 0.5% to $37.10.