Tech giants including Intel, AOL Time Warner and EMC reported their quarterly results, while Federal Reserve Chairman Alan Greenspan spoke to Congress.
The Nasdaq composite index dipped 51.15 points to 2,016.17, while the Dow Jones industrial average fell 36.56 points to 10,569.83.
The Federal Reserve could continue to slash interest rates in the hope of prompting an economic rebound, Greenspan said. Speaking to the House Financial Services Committee, Greenspan said that the six rate cuts the Fed has already made this year, plus a tax cut and cheaper energy costs, should assist the economy as it tries to pull out of its slowdown later in 2001.
Greenspan's lack of positive remarks didn't bode well for the markets.
"If we have weak economic activity, it's in the cards we'll have sharp declines in corporate profits," Mickey Levy, chief economist at Bank of America, told Reuters. "Has the market built that in? Not fully."
Intel shares were off $1.01 to $28.89. The company on Tuesday topped earnings estimates for the second quarter but saw net income drop dramatically from a year ago. Intel posted pro forma net income of $854 million, or 12 cents a share, topping the First Call estimate of a profit of 10 cents per share.
EMC reported second-quarter earnings in line with lowered estimates and said the global economy has "become much tougher." The storage maker, which issued a profit warning earlier this month, posted earnings of $109 million, or 5 cents a share, for the quarter, on sales of $2.02 billion. EMC was down $2.34 to $18.05.
Veritas, which makes storage software, saw shares plunge $13.34 to $37.08, a day after the company reduced revenue growth estimates. Veritas now expects to see revenue growth in the 25 percent to 35 percent range in 2001, far below the 35 percent to 50 percent growth it reiterated just a few weeks ago.
CNET's storage index was down more than 10 percent.
AOL Time Warner dipped $4.80 to $44.65 despite posting a pro forma net profit of 32 cents a share, well above the 28 cents per share expected by Wall Street analysts. Revenue figures for the second quarter were below expectations, coming in at $9.2 billion, compared with the $9.74 billion consensus figure. AOL reiterated its year-end financial goals but cautioned that the $40 billion revenue guidance would be "at the top of the range" of the company's performance.
Apple was also on the move, after the company on Tuesday topped estimates for the third quarter. Shares slipped $4.31 to $20.79, following the company's report of a 70 percent year-over-year drop in net profits to $61 million, or 17 cents per share. Apple cautioned that revenue for the second half of the year could be below forecasts.
Among leading volume movers, Cisco Systems fell 64 cents to $17.15, Sun Microsystems was down 60 cents to $13.99, Microsoft dropped $1.25 to $70.47 and Siebel Systems was down $5.91 at $37.64.
Staff and Reuters contributed to this report.