Jitters Knock the Dow Back Below 9,000
The stock market suffered a broad decline Tuesday, one day after the Dow Jones industrial average made history by closing above 9,000 for the first time.
The Dow index fell 76.73 points, or 0.9%, to 8,956.60, after recovering from a late-afternoon drop of nearly 140 points.
In the broad market all major indexes lost ground, led by the Nasdaq composite, which fell 30.43 points, or 1.7%, to 1,798.71. It had been down more than 2%.
The urge to take profits hit most major market sectors. Losers outnumbered winners by more than 2 to 1 on the New York Stock Exchange and by nearly 2.5 to 1 on Nasdaq, in active trading.
Traders said Motorola’s announcement late Monday of poor first-quarter earnings--and its warning that earnings will remain depressed in the near-term--struck a nerve with investors, despite analysts’ well-publicized earnings-estimate cuts for many companies in recent months.
“The profit cautionary by Motorola put a very wet blanket on the technology stocks, and that dragged the rest of the market down with it,” said Thom Brown, market strategist, Rutherford, Brown & Catherwood of Philadelphia. “Everything that has been doing well was subject to profit-taking.”
Motorola plunged $6.38 to $53.50, pulling the tech sector down.
What’s more, the frenzy for financial stocks on Monday--triggered by news of the blockbuster merger deal between Citicorp and Travelers Group--turned to caution on Tuesday.
Citicorp, up $37.63 on Monday, fell $15.38 to $165.13 on Tuesday; Travelers lost $4.63 to $68.38 after jumping $11.31 on Monday.
The Standard & Poor’s financial-stock index fell 1.6% on Tuesday from Monday’s record high.
The bond market offered no help, as yields were up slightly. And gold prices inched up to their highest level since November--another potentially worrisome note for stocks, some analysts said.
With the Dow still up 13.3% year-to-date, profit-takers could take control of the market in the short-term, analysts warn.
Among Tuesday’s highlights:
* Financial issues sliding included J.P. Morgan, down $4.81 to $139.94; American Express, down $1.25 to $103.25; Chase Manhattan, down $3.38 to $143.63; and Conseco, which dove $8.63 to $49.13 after it announced a major takeover (see story, D3).
* Tech stocks taking a hit included Intel, down $1.25 to $72.63; Microsoft, down $2.69 to $87.25; IBM, off $1.31 to $104.69; Dell, down $2.13 to $63.18; Lucent, down $3.31 to $66.19; and Seagate, down $1.56 to $23.38.
* Among consumer growth stocks losing ground were Warner Lambert, down $3.25 to $178.75; Pfizer, down $2.44 to $100.81; and Gillette, down $1.94 to $121.13.
In currency markets, the dollar tumbled against the Japanese yen amid fresh signals that Japan’s government is moving closer to tax cuts and other measures to stimulate the country’s feeble economy.
In late New York trading, the dollar ended at 133.35 yen, down from 134.80 yen Monday.
The news on Japan helped lift Tokyo’s Nikkei-225 stock index 1.7% to 15,978.
The South Korean stock market, meanwhile, surged 5.4%. Korea began selling $3 billion of five- and 10-year notes Tuesday in its first international debt sale since the Asian economic crisis began last year. The 10-year notes are expected to yield about 3.62 percentage points above 10-year U.S. Treasury notes, which pay 5.53% currently.
