Stocks close significantly lower on fears about economy, earnings


Associated Press

NEW YORK — Fears about a harsh economic slowdown and continuing weakness in corporate earnings sent stocks sliding today, with the Dow Jones industrials giving up more than 260 points and the Nasdaq hitting another low for the year.

Disappointed that the Federal Reserve declined to lower interest rates Tuesday and scared that the Fed has acknowledged the economy may be slowing too much and too fast, investors dumped both high-tech shares and blue chips.

"Investors are seeing a confirmation from the Fed that the economy is very weak and that earnings are going to be pretty poor and that assistance from the Fed is not going to be right away," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.

The Dow fell sharply, closing down 265.44 at 10,318.93.

The Nasdaq composite index finished down for the seventh straight session, falling 178.93 — or 7 percent — to 2,332.78. It was the Nasdaq’s lowest close since March 23, 1999 when it ended at 2,322.84.

The tech-focused Nasdaq also is down about 43 percent so far this year and has fallen more than halfway from its record close of 5,048.62 set on March 10, 2000.

The broader Standard and Poor’s 500 index today stumbled 40.86 to 1,264.74.

President-elect George W. Bush’s appointment of Alcoa chairman Paul O’Neill as the new treasury secretary seemed to hold little sway with investors, analysts said.

Stocks have been heading lower since around Labor Day, as investors have sold off stocks — mainly in the high-tech sector — based on fears that profits would be further pinched by an economic slowdown, high interest rates and decreased consumer confidence. Meanwhile, a litany of companies have warned that future earnings would indeed be disappointing.

"We’ve actually had a crash over the last few weeks, not a one-day crash," said Ricky Harrington, a technical analyst for Wachovia Securities. "I think we are getting close to a short-term bottom, the beginning of a technical rebound."

Typical year-end tax-loss selling compounded Wednesday’s drop in the market, analysts said.

But with the year almost over and with most stocks at bargain basement prices, "we are very close to a start of a spectacular January rally," Harrington said.

A rally early next year likely will be concentrated among tech stocks, which have plummeted from premium prices, Harrington said. Blue chips haven’t been hit as hard, because investors have been redirecting their tech investments into shares of popular consumer brands, drug makers and financial companies.

Another analyst predicted investors could abandon their Scrooge-like way of selling to bid stocks up later this week.

"The rally starts very soon," said Larry Rice, chief investment officer at Josephthal &amp Co. "We are ridiculously oversold."

Still, most analysts believe the any upcoming rally will be a short rebound and that the market will remain bearish through the first quarter.

Wednesday’s high-tech losers included Cisco Systems, which skidded $5.25 to close at $36.50 in extremely heavy trading after Merrill Lynch cut its rating on the network equipment maker.

Other tech stocks brought the Dow lower. Computer makers Hewlett-Packard and IBM, which slumped after Merrill Lynch also downgraded those stocks. Hewlett-Packard fell 88 cents to $30.44, and IBM tumbled $4.13 to $86.

But the Dow’s losses were practically across the board. General Motors fell $1.88 to $50, and AT&ampT lost $1.63, closing at $18.94 before warning that fourth-quarter earnings will fall short of expectations.

Retail stocks, battered by declining consumer confidence and a lackluster holiday shopping season, posted more losses. Despite faring better than most competitors, Target fell 56 cents to $28.19. Home Depot, which is a Dow industrial, slipped $1.50 to $41.13.

But drug makers gained ground. Merck rose $1.88 to $93.38, and Johnson &amp Johnson climbed $1.44 to $100.63.

The Commerce Department reported earlier that housing construction rose 2.2 percent in November, the biggest jump in nine months. But builders — like investors — are worried that a slowing economy will crimp their business.

Declining issues outpaced advancers slightly more than 2 to 1 on the New York Stock Exchange where consolidated volume was 1.74 billion shares, ahead of the 1.59 billion on Tuesday.

The Russell 2000 index, which tracks the performance of smaller companies, fell 14.98 to 443.80.

Overseas markets also were lower. Japan’s Nikkei stock average fell 1.5 percent, and Germany’s DAX index tumbled 3.6 percent. Britain’s FT-SE 100 lost 1.9 percent, and France’s CAC-40 fell 3.2 percent.

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

Talk to us

More in Local News

Snohomish County Councilmember Nate Nehring, left, speaks alongside Councilmember Jared Mead during the Building Bridges Summit on Monday, Dec. 4, 2023, at Western Washington University Everett in Everett, Washington. (Ryan Berry / The Herald)
County Council members launch bipartisan ‘Building Bridges’ nonprofit

Jared Mead, a Democrat, and Nate Nehring, a Republican, hosted an event attended by 100 people this week in Everett.

Everett Police Chief Dan Templeman announces his retirement after 31 years of service at the Everett City Council meeting on Wednesday, Sept. 27, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
After 40 days retired, Everett ex-police chief hired to mayor’s office

Everett’s longtime police chief, Dan Templeman, retired Oct. 31. He’s set to start a new role as senior executive director Monday.

Lead climbers head up their respective routes at Vertical World North on Monday, Nov. 20, 2023, in Lynnwood, Washington. (Ryan Berry / The Herald)
Beginner’s ascent: A newcomer’s guide to indoor climbing

Indoor climbing gyms in and around Snohomish County offer thrills without winter chills.

Providence Regional Medical Center Everett. (Olivia Vanni/The Herald)
Providence Swedish tightens COVID, mask policy

Citing a rise in respiratory illness, local hospitals and clinics will require masks for care.

Chestnut mushrooms grow in a fruiting tent on Friday, Dec. 1, 2023, at Black Forest Mushrooms in Everett, Washington. (Ryan Berry / The Herald)
Fungi town: Downtown Everett home to new indoor gourmet mushroom farm

Black Forest Mushrooms will grow up to 20,000 pounds of tasty mushrooms each month. Its storefront opens Saturday at 2110 Hewitt Ave.

Outside of Angel of the Winds Arena on Wednesday, Nov. 22, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Police arrest Angel of the Winds arena worker accused of stabbing boss

The man allegedly walked up to his employer and demanded a raise, before stabbing him in the stomach, witnesses said.

The town post office in Index, Washington on Wedesday, Nov. 29, 2023.  (Annie Barker / The Herald)
Index, smallest town in Snohomish County, is No. 1 in voter turnout

Index has beaten the Snohomish County ballot return rate in each of the last 10 years. Snohomish County leaders have a few theories as to why.

Founder and Executive Director Pa Ousman Joof, alongside Lynnwood Mayor Christine Frizzell, right, prepares to cut the ribbon during the grand opening of the Washington West African Center on Saturday, Dec. 2, 2023, in Lynnwood, Washington. (Ryan Berry / The Herald)
Born out of struggle, West African Center flourishes in Lynnwood

African music filled the room Saturday at 19203 36th Ave. West, for the grand opening of the nonprofit’s new state headquarters.

Darrington Elementary School fourth grader Brayden Parris, 9, fills up his cup with chocolate milk from one of the schools new milk dispenser during lunch on Monday, Nov. 20, 2023 in Darrington, Washington. (Olivia Vanni / The Herald)
Darrington school reduces lunchroom waste with new milk dispensers

Milk cartons generally aren’t accepted by recycling centers in Snohomish County. Dispensers could be a solution. And they save milk too.

Pedestrian struck and killed on Everett Avenue

Police responded to the incident at the intersection of Everett and Virginia avenues to find one man dead.

Shayne Baker appears in court during a sentencing hearing Friday, Dec. 8, 2023, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Baker sentenced to 93 years for Everett double murder

Shayne Baker was convicted in the murders of Anthony Jolly and Anthony Burnett. He has another sentencing for a third murder Tuesday.

A person sits and looks out at Mt. Index in Index, Washington on Wednesday, Nov. 29, 2023.  (Annie Barker / The Herald)
Near Mt. Index, Forterra secures key piece in conservation puzzle

The nonprofit has been acquiring land in the region for decades. Now the project is complete, with funding from the county.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.