Lovely headline don't you think? Sheesh <g>
And the first two words, "Stocks Tanked" is in bold caps.
What's really comical is the first name of the author, how gloomy can this get LOL
These news articles pouring out are getting so bearish we've got to bounce hard soon. Any day a bear is going to show up on a magazine cover mauling a bull <g>
Techs Blow Another Gasket
By Igor Greenwald
February 21, 2002
STOCKS TANKED Thursday as new profit warnings reminded investors that improving economic data have so far failed to end the earnings slump.
Techs squandered more than twice the previous day's gains en route to their lowest close since Halloween. The blue chips flirted with the 10,000 mark early before wilting in sympathy.
The Dow fell 106 points to 9834, while the Nasdaq dropped 59, more than 3%, to 1716. The S&P 500 fell 17 to 1081. Networkers and chip makers gave up more ground, as did telecoms and newspaper publishers. Health insurers and energy producers held up best.
Optical networker Ciena (CIEN) warned that two of its top customers are continuing to slash their spending, leaving the second-quarter sales forecast way short of expectations and 38% below the first-quarter total. The company's shares dropped 13% after it reported a first-quarter loss of 17 cents a share.
BellSouth (BLS) became the latest telecom provider to slash investment plans Thursday morning, trimming its 2002 budget by $500 million to $5 billion tops. Weakness in Latin American markets and delays in entering the competition for long-distance customers will weigh on first-quarter revenues and earnings, the company warned. The stock slid 6%.
Top networker Cisco Systems (CSCO) faced selling pressure as well after another New York Post report questioning whether its top executives wrongly profited from stakes in a private partnership that did business with the company. The stock fell 9%.
Top chip maker Intel (INTC) felt the heat as well, dropping 6% after Banc of America cut earnings estimates, noting that the supply of processors has been catching up to demand in recent weeks.
Media giant AOL Time Warner (AOL) skidded 5% to a new three-year low on reports that the Janus fund family, the company's largest outside shareholder, is trimming its stake.
Traders cast the rare envious look toward Tokyo, where the benchmark Nikkei index surged more than 4% amid a sudden outbreak of optimism about the banking sector's chances of surviving its debt crisis.
U.S. executives, meanwhile, continue to pour cold water on expectations of a strong economic recovery this year. Incoming IBM (IBM) Chief Executive Sam Palmisano told resellers to prepare for another lean 12 months. "2002 in our view is going to be a very tough economic year," Reuters quoted him as saying. "We're assuming that's the case. Maybe things get better. Maybe they don't." IBM shares fell another 3%, stranding Big Blue in the Dow's basement alongside Intel, Microsoft (MSFT) and AT&T (T).
Economists, Wall Street analysts and many investors have been much more confident of a rebound. The question is whether Palmisano and his counterparts at such market leaders as General Electric (GE), Microsoft (MSFT) and American Express (AXP) are purposely lowballing expectations or whether their glass is really more than half-empty.
A top executive at leading insurer American International Group (AIG) issued a dire forecast of his own overnight. Whatever the Enron (ENRNQ) scandal's ultimate effect on corporate earnings and share prices, it could really hurt insurers who cover the liabilities of corporate directors and executives as shareholder lawsuits pile up, Vice Chairman Thomas Tizzio warned an insurance conference in Bermuda. AIG shares fell 4% in heavy trading.
Two of the 11 insurers who provided such policies at Enron have already balked at paying such claims, according to the New York Times. St. Paul (SPC) subsidiary St. Paul Mercury and Royal Insurance, a unit of Britain's Royal & Sun Alliance (RSA), have charged that they were misled by Enron executives. At stake is coverage estimated at $350 million, according to the Times.
Another big insurer, Aetna (AET), would no doubt blame Enron if it could. Instead, it must face up to the fact that it didn't hike medical premiums fast enough to offset rising medical costs last year. That led to an operating fourth-quarter loss of 59 cents a share, far worse than the 42 cents a share in red ink Wall Street expected. Severance costs for the recently announced 6,000 job cuts and other one-time charges added up to a net loss of $1.30 a share. Aetna had been expected to start posting a profit in three months' times, but now appears to be hedging on that forecast. The stock still rose 5%.
The vibe was better in retail, though here too the recent past looks brighter than the near-term future. Department-store operator J.C. Penney (JCP) beat analysts' consensus forecast by a nickel with fourth-quarter earnings of 35 cents a share on a 4% year-over-year increase in same-store sales. But it then warned that this year's bottom line would fall between a penny and 11 cents a share short of the consensus estimate. That and charges of a cover-up in a lawsuit alleging overcharges by the Eckerd pharmacy subsidiary saddled the stock with a 12% discount.
Electronics retailer RadioShack (RSH) warned as well, projecting first-quarter earnings of 28 cents to 29 cents a share, at least a nickel short of analysts' consensus estimate. The company did top expectations by a penny with fourth-quarter earnings of 67 cents a share, even as same-store sales slipped 2%. The stock moved fractionally lower.
Stocks strengthened briefly after the Philadelphia Fed's gauge of regional economic activity rose in February to 16.0, topping expectations in its fourth straight monthly rise. In other economics news, initial unemployment claims edged up 10,000 last week to 383,000. But the index of leading indicators rose again in January, adding 0.6% in line with estimates.
Bonds edged up, sending yields lower. The yield on the 10-year Treasury note slipped to 4.86% from 4.89% late Wednesday, while the two-year note yielded 2.93%, down from 2.94% a day earlier.
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