DJ US Stocks Stumble Badly; What Went Wrong? Oh, Everything
By Robert O'Brien Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Wall Street staged its worst loss in three months, but don't say it didn't earn it: the session featured more plot lines than a soap opera, more disasters than an action picture, and more heartache than a country song.
Just one of the plot points of the session featured Tyco. The industrial conglomerate that has long been a favorite of the Wall Street cognoscenti for its acquisition prowess and its management ability sank $8.35, or 20%, to $33.65, setting a 52-week low on the day, after an article in Tuesday's edition of The Wall Street Journal raised ethical questions about a payment the company made to one of its directors.
Tyco issued a comment aimed at blunting the controversy, but in a post-Enron environment, anything that smacks of corporate shenanigans is being treated fairly savagely. A total of 165 million shares of Tyco changed hands in composite trading, with 137 million trading at the New York Stock Exchange, about 8% of the 1.7 billion shares that traded at the exchange.
Over on the Nasdaq Stock Market, WorldCom finished at the top of the volume board, with 151 million shares trading, and the stock off 1.60, or 13%, to 10.40, amid speculation of some adverse development ahead. None such evidenced itself in Tuesday's trading.
International Business Machines finished the day down 5.15, or 4.8%, to 103. The computer giant announced that Samuel Palmisano will succeed Louis Gerstner as chief executive. The stock was also reacting to a fairly bearish call on the computer hardware sector from Merrill Lynch, which reinitiated coverage of the stock with a neutral rating. The competing headlines showed, once again, just how boisterously the news flowed in Tuesday's trading.
Meanwhile, cyclical stocks, which had been supporting the market during the runup in the four preceding sessions, came under some pressure, as investors figured that the Federal Reserve, which is slated to announce the results of its monetary policy meeting Wednesday, is going to let Wall Street know that the string of interest-rate cuts that began 13 months ago is coming to an end.
Shares of transportation stocks, such as CNF, which fell 2.28, or 6.6%, to 32.14, lost ground, while manufacturers, like Minnesota Mining & Manufacturing, which dropped 1.89, or 1.7%, to 108.65, and capital-equipment makers, such as Caterpillar, which shed 1.13, or 2.2%, to 49.70, also took a hit.
The Dow Jones Industrial Average, which started the day modestly higher, ended with a big drop, down 247.51 points, the steepest point loss since Oct. 29, when the industrial average skidded 275.67 points; the Dow fell 2.51% on percentage basis, finishing at 9618.24.
Ironically enough, the Dow industrials, which came into the session riding a string of four days of gains, albeit just modest gains each time, started the day higher in anticipation of some accommodating economic reports.
"We initially greeted the data we saw pretty favorably, but then we seemed to realize that we were seeing another reason the Fed is not going to lower rates again tomorrow," Todd Clark, head of listed trading at Wells Fargo Securities. "Then, of course, you add in the fact that something seemed to go wrong every few minutes. How is the market not expected to sell off under those circumstances?"
On the New York Stock Exchange, there were 943 issues advancing, 2,165 declining and 193 unchanged.
NYSE volume totaled 1,753,567,620 shares, compared with 1,166,730,530 Monday.
The NYSE Composite Index was 564.93, down 14.70. The average price per share fell 86 cents.
Want more plotlines? Shares of PNC Financial Services Group sank 5.79, or 9.4%, to 56.08, after the Pittsburgh banking concern said it would restate its 2001 results in a way that would reduce earnings in order to reflect some changes the Federal Reserve said it wanted.
Concerns that the Fed may crack down on the accounting methods of the banking sector hit a number of other names. Bank of America fell 4.44, or 7%, to 59.20, Mellon Financial lost 2.40, or 6%, to 37.43, and Comerica slid 2.98, or 5.2%, to 54.06.
Meanwhile, shares of J.P. Morgan, part of that reeling banking sector, also got nicked on worries about its exposure to Global Crossing, the telecommunications network that filed for bankruptcy protection. J.P. Morgan lost 2.26, or 6.6%, to 32.05.
Energy stocks tanked on something fairly pedestrian: reaction to earnings statements. But the earnings statements weren't routine, inasmuch as the results echoed comments that Lehman Brothers made ahead of the session: the energy patch is operating amid some dismal fundamentals.
Shares of ChevronTexaco lost 3.70, or 4.2%, to 85.17, after the energy giant, reporting results for the first time following Chevron's $38 billion acquisition of Texaco in October, reported a fourth-quarter loss.
Among other energy names, shares of Apache lost 1.28, or 2.7%, to 46.38, El Paso fell 2.30, or 6.2%, to 34.98, reaching a 52-week low intraday, and Mirant slid 83 cents, or 7.7%, to 10.01.
Williams lost 5.36, or 22%, to 18.78. The Tulsa, Okla., energy trader and pipeline operator dropped to a 52-week low in the session, after saying it would delay the release of its fourth-quarter earnings in order to take more time to complete an assessment of its obligations stemming from its communications unit, Williams Communications Group, which it spun off last year.
Williams Communications, in a statement, said the announcement from its former parent created significant confusion in the marketplace.
Actually, by Tuesday's standard, it seemed fairly clear-cut.
Shares of telecommunications-equipment maker Ciena fell 27 cents, or 2%, to 13.42 on Nasdaq, after some critical comments from RBC Capital Markets, which suggested the company may be banking on bigger capital budgets than service providers, which use Ciena's equipment in their networks, are planning.
Shares of some other telecommunications names exposed to information-technology capital spending also moved lower, with Juniper Networks off 40 cents, or 2.4%, to 16.52, and Extreme Networks down 30 cents, or 2.3%, to 13, both on Nasdaq.
UTStarcom fell 3.33, or 11%, to 27.99 on Nasdaq, even though Chinese telecommunications equipment maker came through Tuesday with strong revenue growth for 2001 and boosted its forecasts for 2002, prompting Salomon Smith Barney to raise its price target on the stock.
It's not accurate to say there weren't some nuggets of good news in the session. Texas Instruments, for example, reported a narrower-than-expected loss for the fourth quarter, and raised its financial projections for the first quarter. The stock gained 1.58, or 5.6%, to 9.96. The results prompted Salomon Smith Barney to raise its estimates and its target price on the stock.
Medical device maker Stryker climbed 3.46, or 6.4%, to 57.76, after putting up fourth-quarter results that showed revenue grew faster than analysts expected. Deutsche Banc Alex. Brown, which said the company is showing its strongest growth characteristics in years, raised its numbers going forward.
Qwest Communications International fell 59 cents, or 4.8%, to 11.76, and traded just above its 52-week low of 11.08. The telecommunications services concern reported fourth-quarter results that missed forecasts, and reduced guidance for 2002.
Cendant fell 1.83, or 10%, to 16.52. The travel services and marketing concern declined even though Lehman Brothers said it expects an upbeat earnings report out of the company next week, and the broader travel-services sector fared well in the session.
Shares of Expedia climbed 5.10, or 10%, to 55.86 on Nasdaq. The Bellvue, Wash., online travel services provider put up stronger-than-expected fiscal second-quarter results, which included the company's first profitable quarter.
Hotel Reservations Network, Dallas, which climbed 18% Monday in response to its quarterly earnings report, tacked on another 2.59, or 5%, to 54.84, reaching a 52-week high in Nasdaq trading.
Shares of some gaming stocks finished lower for a second straight session. CIBC World Markets, in a research note, cited concerns about the prospect that states in the Midwest, such as Indiana and Illinois, could raise taxes on casinos that operate there. Shares of Harrah's Entertainment fell 1.56, or 4%, to 37.93, while Hollywood Casino lost 35 cents, or 3.3%, to 10.15.
However, rival Argosy Gaming ended higher, up 2.56, or 7.8%, at 35.26. The Alton, Ill., casino owner put up stronger-than-expected fourth-quarter profits.
Quest Diagnostics fell 1.15, or 1.6%, to 69.90, even though Thomas Weisel Partners said it liked what it saw in the Teterboro, N.J., laboratory testing services provider's fourth-quarter results, which included stronger earnings than Wall Street forecast.
(END) Dow Jones Newswires 29-01-02 |
