Dow Falls to Near 5-Year Low
Stocks swooned again Friday, dragging the Dow industrials to their lowest point in almost five years as another round of bad news about corporate profits rattled investors.
“People are scared to buy stocks,” said Anthony Iuliano, head equity trader for Glenmede Trust Co., as the Dow and other major market barometers notched their sixth straight week of losses.
Stocks have been hammered in recent weeks amid a steady stream of downbeat earnings reports, and Friday was no exception. A mixed reading on the job market in September, the continuing West Coast port shutdown, fears of a war with Iraq and a $28-billion judgment in a California tobacco lawsuit against Dow member Philip Morris added to market jitters.
“It’s tough to find stock that you really want to buy in this type of environment,” said Dan McMahon, head of listed trading at CIBC World Markets Inc.
The Dow industrials lost 188.79 points, or 2.5%, to 7,528.40, its lowest close since November 1997. The broader Standard & Poor’s 500 index fell 18.37 points, or 2.2%, to 800.58, barely 2 points above the five-year low it reached in July.
The Nasdaq composite index lost 25.66 points, or 2.2%, to 1,139.90, sinking to its lowest level since September 1996. The technology-focused index is off 41.6% year to date.
Losers trounced winners by 3 to 1 on the New York Stock Exchange and more than 2 to 1 on Nasdaq. Trading was active.
For the week, the Dow lost more than 2%, the S&P; 500 fell more than 3%, and Nasdaq surrendered almost 5%. The S&P; 500 last fell six weeks in a row in February and March 2001.
The market opened higher after the government said the U.S. jobless rate fell to 5.6% in September, from 5.7% in August. But there were trouble spots in the report, traders said. Payrolls fell for the first time in five months, showing the uneven pace of the U.S. economic recovery.
The early gains quickly evaporated, and the market headed lower as Wall Street grappled with disappointing earnings reports.
Dow member Boeing lost $2.30 to $32.01, after the world’s largest commercial jet maker said the shrinking value of jets it finances would cut quarterly net earnings.
EMC tumbled $1.18, or 23.6%, to $3.83 and ranked as the most active stock on the New York Stock Exchange. The data storage company reported a preliminary quarterly loss and revenue that were worse than expected.
Schering-Plough fell 34 cents to $17.30, adding to days of steep declines. The drug company warned that its earnings in 2003 and 2004 would be far below forecasts as the firm loses patent protection on top allergy drug Claritin.
And two more banks--Hibernia and Northern Trust--cut their third-quarter profit forecasts, pressuring already depressed financial stocks. Hibernia lost $1.02 to $17.75 and Northern Trust fell $1.93 to $31.81. All 52 members of Bloomberg’s index of bank stocks fell as the index slid 3%.
“Each new day brings a new list of companies that warn us that Wall Street is too optimistic about third-quarter earnings,” said Hugh Johnson, chief market strategist with First Albany Corp. in New York. “Earnings for the third quarter are not going to be anywhere near as rosy as we thought.”
The mood wasn’t helped by the verdict against Philip Morris, which fell $2.91 to $36.59. A jury in Los Angeles ordered the world’s largest cigarette maker to pay $28 billion in damages to a woman with lung cancer. The Amex index of nine tobacco stocks fell 5.6%.
Times staff writer Kathy M. Kristof contributed to this report. Reuters and Bloomberg News were used in compiling it.
Market Roundup, C4-5
