Nasdaq falls to lowest level since May

Associated Press

NEW YORK – Stocks slid sharply today, pushing the Nasdaq market to the lowest level since May, as profit worries again rattled technology shares and an unexpected drop in unemployment stoked fears of rising inflation.

According to preliminary calculations, the technology-focused Nasdaq composite index fell 111.03 to 3,361.07, only about 150 points above this year’s lowest close at 3,205.11 on May 26. For the week, The Nasdaq fell 8.5 percent.

The Dow Jones industrial average fell 128.38 to 10,596.54, its lowest close since August. The Standard &Poor’s 500 fell 27.30 at 1,408.98.

The market opened the day higher, but soon turned lower as investors grew defensive before the barrage of profit reports expected over the next three weeks. Investors are increasingly worried that companies won’t meet Wall Street forecasts.

“It’s hard to identify a really concrete catalyst here,” said Charles White, portfolio manager at Avatar Associates. “People want to get out of the technology names and nobody’s home to bid for those stocks.”

Concerns about third-quarter profit reports, which begin in earnest next week, have dogged the market since early September. Warnings of poor earnings have provoked a series of selloffs, with high-tech issues particularly vulnerable.

The pattern continued today.

Shares of Veeco tumbled after the semiconductor company warned of disappointing earnings and a UBS Warburg analyst downgraded the stock from “buy” to “hold.”

A similar warning from software company Marimba sent its shares plunging.

Leading the Dow’s decline was J.P. Morgan. Home Depot also weighed down the blue-chip average after rival Lowe’s said its same-store sales would be down for the third quarter.

The latest downturn came after the Labor Department said the nation’s unemployment rate fell to 3.9 percent in September and total employment rose by 252,000 after two months of declines.

Analysts had been expecting a higher unemployment rate, but White, the Avatar analyst, downplayed the report’s impact.

“You can’t blame this morning’s unemployment report for what we’re seeing going on in the markets,” he said. “I think earnings disappointments, fear of disappointing earnings and, investors overexposed in some of the more volatile stocks looking to run and hide are causing this.”

Declining issues outnumbered decliners by a 2-to-1 ratio on the New York Stock Exchange and the Nasdaq Stock Market.

The Russell 2000 index fell 11.65 to 491.02.

Overseas, Japan’s Nikkei stock average fell 0.65 percent. Germany’s DAX index fell 1.21 percent, Britain’s FT-SE 100 was up 0.14 percent, and France’s CAC-40 was off 0.58 percent.