Stocks Mauled, Dow Below 10,000
Wednesday March 14, 3:28 pm Eastern Time
By Haitham Haddadin
<<NEW YORK (Reuters) - Stocks were hit hard in late afternoon trading on Wednesday, with the blue-chip Dow again sinking below the key 10,000 level amid unrelenting selling from investors worried about the soft U.S. economy, bleak corporate profits and Japan's troubled banking sector.
There were few places to hide as the latest chapter in the demise of the 1990s bull market unfolded. The sell-off shoved the Dow Jones industrial average (.DJI) below the 10,000-point mark several times, levels not seen since last October. The tech-packed Nasdaq Composite Index (.IXIC) was well below the 2,000 mark, a level it pierced on Monday for the first time in more than two years.
``Everything is so overwhelmingly bearish,'' said Donna Van Vlack of Brandywine Asset Management, which has $7 billion under management.
``I am waiting to get my copy of Newsweek and see a dead bull on the cover, and then I would know it is safe to go all the way into the water,'' she said. ``That's what it feels like; no one can think of a single decent thing to say about anything.''
The Dow sank 374.07 points, or 3.63 percent, to 9,916.73, in its latest trek during the session under 10,000. Most of its 30 stocks were down, and the index has now shed more than 900 points since a recent peak of 10,858 last Thursday.
The broad Standard & Poor's 500 Index (.SPX) slumped 39.29 points, or 3.28 percent, to 1,158.37. The tech-laden Nasdaq fell 59.83 points, or 2.97 percent, to 1,954.95, after a brief foray into positive territory on some bargain-hunting earlier.
The S&P is in bear market territory as defined by a drop of 20 percent or more from its high, and the Nasdaq has been mired in a bear market for months and is down more than 61 percent from its all-time closing high at 5,048.62 reached last year.
Yet another warning of weakening profits from the high-tech sector only served to sour investors' sentiment further. Wireless telephone company Nextel Communications Inc. (NasdaqNM:NXTL - news) said its first-quarter results will take a hit from the slowing economy, downsizing and higher costs. Nextel fell $6-5/16 to $14-1/8, down a whopping 31 percent.
Financial stocks were hit hard after a major international rating agency expressed concern about the financial situation of Japanese banks, sparking fears U.S. and European banks could get caught in the backdraft of potential defaults.
Blue-chip financial firms like Citigroup (NYSE:C - news) and American Express Co. (NYSE:AXP - news) weighed on the Dow. The Philadelphia Stock Exchange's Bank Index (.BKX) fell 5.42 percent.
International rating agency Fitch said it has placed ratings of 19 Japanese banks under negative review, citing growing concern over bad loans and falling stock portfolios.
``What we've been seeing is a compilation of bad news,'' said Richard Babson, president of Babson-United Investment Advisors which manages $1.8 billion. ``The slowdown in Japan is nothing new but the downgrading of Japanese banks adds more to the froth. You have a slowdown in (the U.S.) economy and an announced slowdown in earnings.''
Hopes that the Federal Reserve, which meets Tuesday, will come to the stock market's rescue with fresh interest-rate cuts should underpin the market a touch, analysts said, as the steep global stock market sell-off revived talk of deep rate cut.
But investors betting the U.S. central bank would slash interest rates sooner were disappointed, Babson said. ``The folks who had been chasing easy money are being chased out of the market,'' he said.
Fast-food giant McDonald's Corp. (NYSE:MCD - news) added to the gloom, saying it had cut its 2001 per-share earnings forecasts, citing problems in Europe, which has been plagued by outbreaks of mad cow disease and foot-and-mouth disease.
McDonald's, a Dow stock, fell 58 cents to $27.21.
Web gear giant Cisco Systems (NasdaqNM:CSCO - news) was the Nasdaq's most heavily traded stock, and fell $1-7/16 to $19-15/16 after it repeated that a sharp slowdown in capital spending was expected to continue into the second half of the year.
But one bright spot was long-distance telephone and data services company WorldCom Inc. (NasdaqNM:WCOM - news), which said it will stick by its growth outlook, quashing rumors to the contrary. WorldCom climbed $1-5/16 to $16-1/2 in heavy trade.>>
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Dalin: When's the fun start...? What a crazy market...=) |
