Markets close lower, erasing Wednesday’s gains

Associated Press

NEW YORK – Stocks closed mostly lower today, ending the market’s brief respite from a month-long selloff. Investors, unnerved by yet another earnings warning from a high-tech firm, once again unloaded any stock perceived as too risky.

Old-economy companies appeared to fare better as investors looked for a safe haven, but the market, continuing a recent pattern, couldn’t hold on to its gains.

The Dow Jones industrial average closed down 60.30 at 10,724.18, according to preliminary calculations. On Wednesday, it gained 64 points.

The Nasdaq composite index fell 51.44 to 3,471.66, erasing much of a 67-point gain Wednesday that broke a three-session losing streak. The Standard &Poor’s 500 index rose 1.89 to 1,436.21.

“People are worried about a slowdown in demand for the high-priced, high-growth stocks of technology companies. They’re looking for safer investments,” said Ronald Hill, investment strategist at Brown Brothers Harriman. “That’s yielded benefits for health care and consumer non-durables stocks.”

Investors concerned that third-quarter results won’t justify expensive stock prices have been unloading shares and taking their profits since the beginning of September. In most cases, the selloffs occurred after high-profile companies including Intel and Apple warned of disappointing earnings.

The catalyst for this latest drop was Dell, which issued its outlook after the close of trading Wednesday. Dell, already trading at a 52-week low before the announcement, fell $2.63 to $25.56 today.

Analysts have said that many of the drops are justified, and merely bring overvalued stocks down to more accurate valuations.

Investors also punished Intel, which slipped $1 to $41 and IBM, off $1.19 at $113.19. fell $3.56 to $5.81, a 38 percent drop, after the online retailer said its name-your-own price program for gasoline and groceries would shut down.

A handful of blue chips were higher, however, including Procter &Gamble, up $2.94 at $73.06. Drug makers also were up; Pfizer rose $1.81 to $44.56 and Merck was up $1.56 at $75.13.

The enthusiasm for these old-economy stocks is directly related to the market’s recent volatility and fears about a more moderate economy, said Hill, the Brown Brothers Harriman strategist.

“A true slowdown in the economy will slow demand for a lot of products. There is some cyclicality in demand for semiconductors and personal computers, but that is not true for drugs, health care and food,” he said. “Their demand is pretty steady no matter whether the economy is growing or shrinking.”

Declining issues outnumbered advancers by a 6-to-5 ratio on the New York Stock Exchange, where volume came to 1.17 billion shares, ahead of 1.16 billion in the previous session.

The Russell 2000 index was down 2.38 at 505.11.

Overseas, Japan’s Nikkei stock average fell 0.31 percent. Germany’s DAX index rose 1.0 percent, Britain’s FT-SE 100 was up 0.74 percent, and France’s CAC-40 rose 0.62 percent.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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