Rising Concerns Push S&P; 500 to 8-Month Low
Fears of war and a worsening confidence crisis in corporate America drove the stock market broadly lower Thursday, while a weak business forecast issued after the closing bell by a key tech stock boded ill for today’s trading.
“Everyone’s just totally worried about accounting issues, potential wars,” said Todd Clark, head of listed trading at Wells Fargo Securities in San Francisco. “The whole mind-set of the market is so incredibly negative.”
After the market closed, technology bellwether Intel cut its revenue forecast on slack demand from Europe. Shares of the computer chip maker, down 4% in the regular session, plummeted an additional 10% in after-hours trading.
“It’s going to look nasty on the opening [today],” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. News that President Bush would address the nation Thursday evening on security issues rattled investors by fanning concerns about future attacks on the United States and flare-ups in the Middle East and the Asian subcontinent.
The Dow Jones industrial average finished down 172.16 points, or 1.8%, at 9,624.64. The Standard & Poor’s 500 index was beaten down 20.75 points, or 2.0% to 1,029.15, its lowest close since Sept. 27. The technology-laden Nasdaq composite index was down 40.38 points, or 2.5%, at 1,554.88.
Losers led winners by more than 2 to 1 on Nasdaq and the New York Stock Exchange in the heaviest trading in more than a month.
The latest economic data gave early strength to stocks, but that faded. The number of U.S. jobless benefits claims fell sharply last week, below the key 400,000 mark for the first time in 2 1/2 months, the Labor Department said.
Intel fell $1.18 to $27 during regular trading after Merrill Lynch analyst Joseph Osha cut midterm ratings on seven semiconductor stocks--including Intel and Texas Instruments. He said low inventory levels that have been fueling an upturn may be nearing the end. Intel’s stock traded at $24.29 after hours. Texas Instruments fell 75 cents to $27.69 in regular trading, and slipped to $26.05 after-hours.
Shares of wireless telephone companies plunged after AirGate PCS cut its subscriber growth forecast for the current quarter, scaring off investors already jittery about slowing growth in the industry. AirGate shares fell 67%--$5.65 a share--to $2.75. AirGate sells wireless service under the Sprint PCS Group brand name. Among other Sprint PCS affiliates, Alamosa Holdings shares fell $1.16 to an all-time low of $2.49. Sprint PCS fell $1.79 to $7.99.
In other trading, the dollar fell to a 16-month low against the euro, and Treasury yields fell as investors fled the stock market for government securities. The yield on the benchmark 10-year Treasury note fell to 4.98% from 5.05% on Wednesday. Gold regained about half its Wednesday loss.
In other market action Thursday:
* Drug maker Merck fell $1.75 to $53.20 after the firm Thursday said the label for its cholesterol fighter Zocor had been changed to indicate a potentially dangerous interaction with the drug Cordarone, used to treat irregular heartbeats.
* Another drug maker, Bristol-Myers Squibb, dropped $1.88 to $26.20. The company’s Plavix is too expensive to justify widespread use by all heart patients, according to a study in the New England Journal of Medicine. Bristol-Myers challenged the findings.
* Perot Systems tumbled for the second day after a California state senator said the computer services firm had shown energy traders ways to manipulate the state’s electricity market by exploiting loopholes in systems it had designed. Shares of Perot Systems fell $1.65, or 11.3%, to $12.90 after falling 19.3% on Wednesday. Late in the session, the firm reaffirmed its financial forecast for its current quarter and the year.
* Investors again punished shares of conglomerate Tyco International, sending them to a new five-year low, on reports former Chief Executive L. Dennis Kozlowski may have used the firm’s cash for personal loans. Tyco shares fell $2.70--or more than 15%--to $14.60, shedding more than $5.4 billion in stock market value.
* Battered Nortel Networks closed down 19 cents at $1.41, a 19-year low. The telecom equipment supplier was expected after the close to raise $800 million from stock and convertible securities offerings.
Market Roundup, C5-6
