Nasdaq flirts with year-low, saved by bargain hunting

By LISA SINGHANIA

Associated Press

NEW YORK — The Nasdaq composite index flirted with its lowest close of the year today, saved only by late bargain hunting in a market that again sank on fears of poor corporate earnings.

Blue chips also fell as part of a downturn that began after Lucent Technologies warned of disappointing third-quarter results. Even positive earnings reports from some of Wall Street’s highest-profile companies failed to stanch the selloff.

The tech-focused Nasdaq closed down 72.05 at 3,168.49, still in negative territory, but well above its late morning level of 3,103.53 — the lowest reading since this past November. The Nasdaq ended the day just above its low close for the year of 3,164.55, set on May 23, and 37 percent off its March 10 closing high of 5,048.62.

The Dow Jones industrial average was down 110.61 at 10,413.79, a mild recovery from its 157.97-point drop earlier in the day.

The Standard &amp Poor’s 500 index was off 22.47 at 1,364.55.

"I wouldn’t say we’ve hit bottom necessarily, but we’ve hit an extreme," said Chris Dickerson of Global Market Strategists in Gainesville, Ga. "Once a market hits an extreme, it will tend to push back the other way."

The market started the day lower after Lucent warned late Tuesday and spent the morning in what appeared to be a downward free-fall.

By early afternoon, the momentum had shifted. The selloff slowed as bargain hunters swooped in looking for cheap stocks. The Nasdaq even moved into positive territory briefly, buoyed by gains in Microsoft, which finished the day up $1.19 at $55.75, and Cisco Systems, which closed up 6 cents at $51.19, after trading more than $2 higher late in the session.

But earnings concerns continued to weigh down stocks as investors sold off shares of big cap companies they considered less likely to turn profits. Oil prices, which rose 7 cents Wednesday to close at $33.25 per barrel on the New York Mercantile Exchange, only added to those fears.

Even positive earnings reports were no protection.

General Electric fell $1.63 to $56.63 and Motorola dropped $5, or 19 percent to $21.63 after each company reported earnings in line with Wall Street expectations.

Web portal Yahoo!’s earnings narrowly beat analyst estimates, but its stock fell $17.31, or 21 percent to $65.38, reflecting worries about its future performance.

Lucent Technologies, which contributed to Wednesday’s overall decline by announcing its fourth-quarter results would be lower than expected, ended the day down $10 or 31 percent at $21.38.

Gains were primarily limited to so-called old-economy issues, like consumer products maker Procter &amp Gamble, which rose $1.06 cents to $73.50, and International Paper, which climbed $1.44 to $29.81. Healthcare company Johnson &amp Johnson rose $1.38 to $96.

Some financial stocks also managed to end the day higher, despite spending much of the session down. Merrill Lynch closed up $1.50 at $59.50, as did J.P. Morgan, up 6 cents at $41.81.

Robert J. Barbera, chief economist at Hoenig &amp Co., said investors’ turn away from technology issues toward traditional blue-chips reflects the market’s uncertainty about the effects of the moderating economy.

"There’s a realization that’s taking place in the marketplace that a soft landing for the U.S. economy is incapable of generating a continuation of the type of earnings that the market has become accustomed to," he said.

Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange, where volume came to 1.38 billion shares, compared with 1.04 billion in the previous session.

The Russell 2000 index was down 6.84 at 474.74.

Overseas, Japan’s Nikkei stock average fell 1.99 percent. Germany’s DAX index was off 1.67 percent, Britain’s FT-SE 100 slipped 2.08 percent, and France’s CAC-40 closed down 3.05 percent.