Indexes’ Early Plunge Ends in Slight Rebound
Major stock indexes plunged from the opening bell Friday as investors reacted to profit warnings from tech leader Intel and drug maker Biogen, but a late-session rebound limited the damage.
Analysts weren’t overly impressed by the late-session bounce, however. They attributed it to bargain hunting after three weeks of mostly falling stock prices, rather than any fundamental shift in investor confidence.
“The reversal was encouraging ... but I’m not willing to ring the bell and say the worst is over,” said Bill Ryder, market strategist at First Union Securities in Richmond, Va. “It’s hard to get too excited about the day’s comeback.”
The Dow Jones industrial average ended with a loss of 34.97 points, or 0.4%, at 9,589.67--its lowest close since Nov. 12. The Dow fell as much as 152 points early in the day and then briefly showed a gain. On Thursday, the average fell 172 points.
Broader stock indicators also were lower, particularly the tech-centered Nasdaq composite index, which ended down 19.40 points, or 1.3%, at 1,535.48. Early on, Nasdaq was down almost 60 points. The Standard & Poor’s 500 index lost 1.62 points, or 0.2%, to close at 1,027.53.
Trading was heavy, with the highest volume on the New York Stock Exchange since Jan. 30. Winners led losers by 5 to 4 on the NYSE and were about even on Nasdaq.
Friday capped a week in which the indexes alternated between steep losses and sharp gains.
For the week, the Dow lost 3.4%, Nasdaq tumbled 5% and the S&P; fell 3.7%. It was the third-straight losing week for all three indexes.
Nasdaq and the S&P; also are closing in on their post-Sept. 11 lows; Nasdaq has 112 points to go, the S&P; is within 61 points.
The bad news from Intel and Biogen overshadowed the Labor Department’s report that the nation’s unemployment rate fell to 5.8% in May, its first decline in three months and a stronger showing than economists had predicted.
Intel fell $5, or 18.5%, to $22 after it dropped its second-quarter sales forecast Thursday because of lower-than-expected demand for personal computer processors in Europe. The news triggered selling across the chip sector and pulled other tech stocks lower.
Investors also pummeled Biogen, sending the pharmaceutical company down $5.54, or 11.6%, to $42.16, after Biogen reduced its financial estimates for the second quarter and full year, citing difficult market conditions.
Among gainers, Boeing rose 80 cents to $42.76, while J.C. Penney advanced 73 cents to $23.33. General Electric gained 90 cents to $30.20.
But investors didn’t blindly buy blue chips. American Express fell $1.20 to $39.16 on broader worries that a weak recovery would hurt the financial sector.
Beating the downward trend, battered and cash-strapped telecom company Nortel Networks rose 23 cents, or 16.3%, to $1.64 even as it announced a new $1.3-billion stock sale that will add between 1.05 billion and 1.14 billion shares to an existing 3.2 billion outstanding.
Although the unemployment report did little for stocks, it did push bond yields higher as investors bet on an economic rebound. The yield on the benchmark 10-year Treasury note rose to 5.07% from 4.98% on Thursday--its biggest one-day jump in a month.
The dollar ticked up against the euro and the Japanese yen.
European markets, which closed while U.S. indexes were still near their lows, were broadly lower.
Market Roundup, C4-5
