Early Rally Falters on Hunt for Terrorists
Key stock indexes ended little changed Tuesday as an early rally faltered after new revelations about the hunt for terrorists.
Utility stocks saw heavy selling amid concerns about one of the industry’s major players.
The Dow Jones industrials closed down 36.95 points, or 0.4%, at 9,340.08 after being up as much as 62 points.
The Nasdaq composite eased 3.64 points to 1,704.44 after trading as high as 1,739.
Monday’s strong rally looked like it would continue Tuesday, until U.S. Atty. Gen. John Ashcroft held a news conference to report that three German-based terrorists are being sought for planning the Sept. 11 terrorist assaults on the World Trade Center and the Pentagon.
Soon after, Washington officials confirmed that the deaths of two postal workers were caused by inhalation anthrax.
“Some people are saying, ‘There are some scary things out there so let’s sell,”’ Ned Collins, head of equity trading for Daiwa Securities America, told Bloomberg News.
Winners and losers were nearly evenly matched on the New York Stock Exchange, while losers had a 19-to-17 edge on Nasdaq.
Individual stocks continued to be buffeted by quarterly earnings reports, which in general have been better than expected but overall are down sharply from a year ago.
Among Tuesday’s losers, agricultural-products company Monsanto tumbled $4.23 to $32.56 after reporting a quarterly loss and projecting weaker-than-expected sales growth for the rest of the year.
Also, drug firm Pharmacia slid $4.37 to $38.39 after projecting that 2002 per-share earnings will be in a range of $1.91 to $1.96, below the $2 Wall Street was expecting.
In other trading, the euro continued to slide against the dollar, dropping to 89.1 cents from 89.2 cents Monday. Treasury bond yields were largely unchanged.
European stock markets racked up hefty gains for a second consecutive session. The German market jumped 1.8%, French stocks surged 2.6% and the Dutch market rose 3.4%.
Key Asian stock markets also were strong. Hong Kong shares leaped 4.3%.
Among Tuesday’s highlights:
* Most drug stocks pulled back with Pharmacia. Bristol Myers Squibb lost $1.68 to $58.02, Pfizer eased 35 cents to $42.65 and Watson Pharmaceuticals slumped $3.05 to $48.11.
* The Dow utility stock index plunged 2.4% as electric utilities were hammered. Concerns about Enron, which is under investigation by the Securities and Exchange Commission, hurt the sector. Enron lost 86 cents to $19.79 after diving 22% Monday.
Among other utilities, Duke Energy fell 46 cents to $38.91, Reliant Resources lost $1.25 to $16.35 and Public Service Enterprise fell $1.30 to $40.
* Transportation stocks were broadly higher. Rail giant CSX soared $2.45 to $35.19 after reporting a jump in earnings. FedEx gained $1.09 to $39.50.
* Some tech shares were hit hard on earnings news. Earthlink slumped $2.51 to $14.85 and FreeMarkets plunged $4.76 to $13.70. Goldman, Sachs & Co. analyst Thomas Berquist said FreeMarkets, an Internet auctioneer, will sign up fewer customers over the next few quarters as the economy slows, Bloomberg News reported.
* Phone giant SBC Communications dropped $2.62 to $38.78, just above its 52-week low, as investors continued to hammer the stock after Monday’s earnings report.
* Many bank stocks continued to rally. Bank One rose 78 cents to $34.40, Bank of America gained 50 cents to $58.91 and FleetBoston added 82 cents to $34.75.
But Downey Financial slid $1.50 to $34.
Market Roundup, C6-C7
