Dow Falls 222.16 on Economic Woes
Dow Falls 222.16 on Economic Woes
Aug. 02, 2002
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NEW YORK (AP) _ Wall Street retreated again Friday, sending stocks sharply lower on mixed results at Disney and a flat unemployment report that failed to reassure investors that the economy is not worsening.
By midafternoon, the Dow Jones industrial average was off 222.16, or 2.6 percent, at 8,284.46, its second-straight double digit loss following a 229.97 drop in the previous session.
Broader stock indicators also fell. The Standard & Poor's 500 index was down 22.30, or 2.5 percent, at 862.36, and the Nasdaq composite index slipped 34.83, or 2.7 percent, to 1,245.17.
The pullback extended selling that began earlier this week following a string of negative economic reports, including a weaker-than-expected gross domestic product report for the second quarter, a drop in construction spending and a weak reading of national business activity.
As a result, a Labor Department report Friday that the nation's unemployment rate was 5.9 percent in July did little to persuade investors to buy. The figure, which was in line with expectations, has held steady for about six months now. But some economists believe it could rise as high as 6.5 percent by the fall as the economy struggles to recover.
``The economic data has not been good. It's a perfectly reasonable catalyst to give back some of these gains,'' said Tobias Levkovich, senior institutional equity strategist at Salomon Smith Barney.
Stocks also have been moving lower as investors take profits from the market's huge rally at the end of July. Over four sessions, the Dow advanced 1,009 points after tumbling for more than two months.
Walt Disney fell $1.76 to $15.07 after meeting expectations but reporting a a 7 percent decline in net income for the third quarter. The loss reflected lower theme park attendance, soft advertising sales at its ABC network and movies that did not do as well as expected.
John Hancock Financial Services lost $1.55 to $30.73 after reporting a 46 percent loss in second-quarter income and reducing its earnings forecast for the year.
Other financial stocks were weak, too. J.P. Morgan Chase fell $1.52 to $23.50, while Citigroup slipped $1.49 to $30.82.
Among technology stocks, National Semiconductor fell 70 cents to $16.43 after reducing its quarterly outlook citing soft demand. The selling spread across the chip sector. Intel tumbled 75 cents to $16.81, while Texas Instruments slid $1.41 to $19.70.
And AOL Time Warner dropped 98 cents to $10.34 following Wall Street Journal and Washington Post reports that regulators were looking into its AOL division's relationship with business software company PurchasePro. AOL Time Warner had previously confirmed that the Securities and Exchange Commission and Justice Department are looking into its accounting practices.
Still, analysts hesitated to say AOL Time Warner's problems were responsible for the broader market's losses.
``Controversy has been around on AOL for a while now and I do think people are getting used to it,'' said Rafael Tamargo, director of equity research at Wilmington Trust. ``Today is just being driven by the recent economic losses, and the fact that there's a lot of reasons not to do anything in the equity markets right now. Stock valuations aren't great, the market psychology is poor and then there's all this economic data.''
Declining issues led advancers 3 to 1 on the New York Stock Exchange. Volume came to 1.03 billion shares, compared with 1.06 billion at the same point Thursday.
The Russell 2000 index fell 10.57 to 378.64.
Overseas, Japan's Nikkei stock average fell 0.9 percent. In Europe, Germany's DAX index slipped 2.1 percent, Britain's FTSE 100 was up 0.8 percent, and France's CAC-40 rose 0.1 percent.
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