Dow Falls More Than 300 Points
Monday, July 15, 2002
Last updated at 10:15:35 AM PT
By AMY BALDWIN
AP BUSINESS WRITER
NEW YORK -- Wall Street's dramatic selloff intensified Monday with investors seeing no reason to buy stocks while they await the release of second-quarter earnings results. The Dow Jones industrials fell more than 300 points, heading for their fifth triple-digit loss in six sessions.
Corporate accounting scandals have spooked investors, making them mistrustful of earnings reports and outlooks for the remainder of the year.
"For lack of a better description, you have as much full-fledged panic as you are going to get," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis. "The negative mentality is as pervasive as I have ever seen it, and I went through (the) `73 and `74" bear market.
In early afternoon trading, the Dow was down 308.68, or 3.6 percent, at 8,375.85, having last week dropped 694.97, or 7.4 percent, in five straight losing sessions. It was the blue chips' largest weekly point decline since Sept. 21, when they dropped 1,369.70 following the terrorist attacks.
The Dow was approaching its Sept. 21 low of 8,235.81. Prior to the terror attacks, the Dow hadn't closed lower since Oct. 14, 1998 when it finished at 7,968.80.
The market's broader indicators, having already fallen through their Sept. 21 lows, also declined sharply Monday. The Nasdaq composite index fell 24.52, or 1.8 percent, to 1,348.98, after last week's loss of 74.86, or 5.2 percent.
The Standard & Poor's 500 index dropped 29.30, or 3.2 percent, to 892.09. The S&P ended last week down 67.64, or 6.8 percent.
Even positive economic news failed to cheer Wall Street Monday when the Commerce Department reported businesses raised their inventories by 0.2 percent. The increase, the first since January 2001 and better than the 0.1 percent analysts had expected, indicates companies are confident enough about the economy to increase their stockpiles.
Despite mounting evidence of an economic recovery, investors have been unloading stocks for eight weeks due to unceasing worries about the integrity of corporate accounting and earnings. The major indexes have not finished a week higher since mid-May.
"Just as the markets were driven on the upside by emotion - euphoria and greed - this market is driven by fear and despair," said Hugh Johnson, chief investment officer at First Albany Corp. "It is not at all unusual for the market to disconnect from the economy and earnings when fear takes hold."
Bookkeeping concerns weighed on Duke Energy, which plunged $3.68 to $21.07 after being downgraded by Morgan Stanley, Salomon Smith Barney and Goldman Sachs. On Thursday, Duke said it had received subpoenas from the Commodity Futures Trading Commission and the Houston office of the U.S. attorney for information related to its trading activities.
Energy company El Paso Corp., which said it received a similar subpoena Friday from the Houston office of the U.S. attorney, declined 85 cents to $16.90.
Disappointing earnings pulled other shares lower. Financial services company Northern Trust fell $1.05 to $38.54 after missing analysts' expectations by a penny a share.
But losses were spread across sectors Monday, indicating investors' lack of confidence in the market as a whole. General Electric declined 83 cents to $27.77, despite reaffirming its yearly earnings outlook last week.
General Motors fell 61 cents to $45.99, after suffering a series of analysts' downgrades last week. Analysts expressed concern about GM's ability to fund its pension plan.
And, Coca-Cola declined 39 cents to $50.66 despite news that it will adjust its accounting to report results more fairly. Coke will begin treating future stock options as employee compensation.
Among gainers, Fannie Mae inched up 18 cents $70.81 after beating second-quarter earnings expectations by 3 cents a share.
Declining issues outnumbered advancers slightly more than 5 to 1 on the New York Stock Exchange. Volume came to 949.95 million shares, just below the 909.62 million traded at the same point Friday.
The Russell 2000 index, the barometer of smaller company stocks, fell 10.93, or 2.6 percent, to 402.35.
Analysts say the dollar, weakening against international currencies, is another drag on the market, and has prompted many foreign investors to exit U.S. equities.
Overseas markets were lower Monday with Japan's Nikkei stock average finishing down 2.1 percent. In Europe, Britain's FTSE 100 and France's CAC-40 each slid 5.4 percent, and in late-day trading Germany's DAX index dropped 4.4 percent. |
