Continuing Sell-Off Led by Airline, Tech Stocks
Investors continued to bail out of shares of companies expected to be hit hardest in a weaker economy, driving key stock indexes to new multiyear lows Thursday.
Airline, entertainment, heavy-industry, technology and publishing stocks led the sell-off, pushing the Standard & Poor’s 500 index down 31.56 points, or 3.2%, to 984.54--its first close below 1,000 since October 1998.
The Dow industrials sank 382.92 points, or 4.4%, to 8,376.21, and the Nasdaq composite tumbled 56.87 points, or 3.7%, to 1,470.93.
Trading remained extremely heavy as losers swamped winners by 26 to 5 on the New York Stock Exchange and by 29 to 9 on Nasdaq.
In other markets, the yen hit a seven-month high against the dollar. Bond yields rose modestly.
On Wall Street, the selling was steady throughout the day and most major indexes closed at or near their lows of the session.
“We would have thought that Monday or Tuesday we worked through the panic and the emotion,” said Robert Streed, manager of the $350-million Northern Select Equity fund in Chicago, referring to markets’ reopening after last week’s closure because of the terrorist attacks.
Instead, many investors see more reasons to sell than to hold on, given the likelihood of further declines in corporate earnings and rising risk of recession, analysts said.
“The economy was in bad shape before this event, and [the attacks] just magnified everything by thousands,” said Gary Kaltbaum, market technician for Investors’ Edge Partners.
Worries about the U.S. economy were reflected in currency trading. The yen rose to 116.07 to the dollar--versus 117.48 on Wednesday--and the strongest level for the currency since February.
The yen’s gains suggest more Japanese investors are selling U.S. assets and bringing their money home.
The yen surged after Japan’s finance minister, Masajuro Shiokawa, said the nation’s central bank hadn’t intervened in the foreign exchange markets to dampen the currency, according to Bloomberg News.
“If they’re not going to make a dedicated effort” to weaken the yen against the dollar, traders “can’t fight the trend” of strength in Japan’s currency, said Tim Mazanec, senior currency strategist at Investors Bank & Trust in Boston.
But the dollar rose modestly against the euro.
In bond trading, Treasury yields inched up after diving in recent days as investors have sought safety.
Among the day’s stock market highlights:
* Losses in foreign markets set a poor tone for Wall Street. The German market slumped 5.7%, French stocks dropped 3.9% and the Japanese market lost 1.6%.
Mexican stocks fell in tandem with U.S. shares, with the IPC index dropping 3.3% to 5,081.92.
* Dow stocks leading that index lower included Honeywell, off $2.99 to $23.59; Eastman Kodak, off $5.03 to $32.58; and United Technologies, down $6.01 to $41.64.
Other heavy-industry stocks off sharply included Georgia-Pacific, down $1.55 to $27.48, and Caterpillar, off $2.70 to $41.70.
* Among airlines, Delta slid $1.81 to $21.85, US Airways fell $1.20 to $4.45 and Northwest dropped $1.06 to $11.01. Jet maker Boeing fell $2.85 to $29.76.
* Walt Disney dropped $1.52 to $16.98 as some major shareholders sold big blocks of stock. Among other entertainment and leisure giants, Viacom class A fell $1.62 to $29.78, Carnival Cruise dropped $1.20 to $18.05 and MGM Mirage lost $2.07 to $17.76.
* In the media sector, Gannett dropped $4.89 to $55.55 and Tribune, which publishes the Los Angeles Times, fell $3.28 to $32.40.
* In the tech sector, Microsoft slid $3.11 to $50.76, Cisco Systems fell 61 cents to $12.88 and Apple Computer gave up $1.34 to $15.68.
* Gold-mining stocks rose even as gold prices pulled back after hitting a 15-month high Wednesday. Barrick Gold gained 55 cents to $17.35 and Newmont Mining jumped $1.10 to $23.90.
Near-term gold futures in New York eased $2.50 to $289 an ounce. Silver also pulled back after soaring Wednesday.
* Some health-care issues rallied. Hospital operator Tenet Healthcare rose $1.50 to $56 after giving an upbeat profit outlook. Medical device maker Medtronic rose 81 cents to $39.80.
* Financial stocks were broadly lower, led by Citigroup, down $2.09 to $36.36; Merrill Lynch, down $2.49 to $36.01; and Golden West Financial, down $4.85 to $54.55.
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Bloomberg News and Associated Press were used in compiling this report.
Market Roundup, C7, C8
