Stocks Sink, Dow Under 10,000 on Profit Worriesgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Stocks Sink, Dow Under 10,000 on Profit Worries
By Haitham Haddadin
NEW YORK (Reuters) -
Stocks slumped to their lowest levels in nearly five months in late afternoon trading on Thursday, with the blue-chip Dow Jones Industrial average below the key 10,000 mark, after a wave of dour outlooks from key technology companies spooked investors.
Network computer maker Sun Microsystems Inc., which fell nearly 20 percent to a 52-week low, helped kick off the selling in the high-technology sector with a downbeat outlook due to sluggish Japanese and European sales.
A bleak forecast from optical fiber giant Corning Inc. also helped stoke renewed jitters about when corporate profits will recover.
``It's more of the same, again the classic squeeze on corporate profit margins and when is it going to turn?'' noted Richard Babson, president of Babson-United Investment Advisors, which manages $1.8 billion. ``Until there's actual evidence that it's going to turn there's not going to be any long-tern sustainable rally in the market.''
The Dow sank 200.59 points, or 1.99 percent, at 9,890.31. The broader Standard & Poor's 500 Index was off 21.85 points, or 1.9 percent, at 1,126.71 and the technology-laced Nasdaq Composite Index tumbled 60.13 points, or 3.26 percent, to 1,783.04.
The indexes were at their lowest levels since early April.
Trading curbs, which are designed to guard against panic selling, went into effect on the New York Stock Exchange at 2.09 p.m. EDT as the Dow tumbled 210 points.
Besides the broad sell-off in the high-tech issues, energy-related and consumer cyclicals moved lower. Investors shifted some funds into defensive sectors, boosting the shares of groups such as tobacco, soft drinks, food, restaurants and homebuilders. Among the Dow issues, tobacco giant Philip Morris rose 62 cents to $47.85.
Sun Microsystems lost $2.53 at $10.90, or 18.7 percent. The company has said it stands to lose money this quarter after Japanese and European sales failed to meet expectations amid sluggish economic growth. Sun was the most actively traded stock on the Nasdaq, and earlier sank to a new year low at $10.40.
Corning, the world's top fiber-optic cable maker, is cutting 1,000 jobs from its fiber unit, and plans short-term shutdowns at two North Carolina facilities due to slack demand for optical fiber and cable. Corning fell $2.38 to $12.22, or 16 percent. It also broke down to a fresh year low at $11.66.
``I would expect the market will continue to have a downward bias until such times as we see more companies indicating their business has pretty much stopped going down and stabilized,'' said Howard Kornblue, portfolio manager at ING Pilgrim, which manages about $18 billion. ``That could take another six months''.
Nasdaq-traded Altera Corp. lost $1 at $27.05. The microchips maker expects third-quarter revenues to fall by 15 percent to 20 percent, consistent with expectations given in July, due to weakening international markets.
More bad news came from the world's top personal computer maker, Dell Computer Corp., which expects technology spending cutbacks in the Asia-Pacific region to continue and remains cautious on PC demand in months ahead. Dell fell 1.63 to $20.17 on the Nasdaq.
Software giant Microsoft Corp was under the microscope again after the European Commission expanded its investigation to look into whether the U.S. software company is illegally tying its Media Player to its Windows operating system. Microsoft, a Dow stock, lost $3.40 to $56.85
Oil services firms fell with Schlumberger Ltd. off $1.85 at $49.05 and Halliburton Co. off $2.20 at $27.95. The Philadelphia oil services index tumbled to yet another 52-week low, at 77.75 points, continuing a slide begun in early July on worries over softer natural gas prices.
On a brighter note, Tech Data Corp. bolted nearly 14.7 percent higher after the hardware and software distributor's earnings fell but still topped Street expectations. Tech rose $4.40 at $38.25.
-- PHO (email@example.com), August 30, 2001
It's amazing, but if you watch C-NBC and read the Wall Street Journal, there are still a lot of pollyannas out there who say we are now touching bottom, good signs show we are about to start moving up, etc. ad naseum. I keep looking for the good signs, too, but I can't see any.
-- Uncle Fred (firstname.lastname@example.org), August 30, 2001.
The sheeple-izer is very effective at managing perception,,,
-- Will (email@example.com), August 30, 2001.
There's too little faith out there, everywhere. Alan Greenspan has gotten us out of these messes before. He will do it again.
-- Polly-Anna (firstname.lastname@example.org), August 30, 2001.
Greedspin can't make people spend their money on goods they don't want or need. Greedspin's latest interest rate cuts have sent the markets lower. Corporations are not borrowing money for business expansion, corporations are laying off people to save money. Consumer debt is at an all time high while consumer savings is very low. The interest rate cuts have not sent credit card interest rates lower, or car loans, or home mortgage loans. Interest paid on CD's or money markets is around 4%, but it's better than losing one's butt in the stock market. Japan's interest rates are zero, people have money in the bank in Japan, but they aren't spending it. We will become like Japan within the next 6 months, people are going to get burned.
-- Mark (MarkS@begga.com), August 30, 2001.