Dow Ends Down 220; Nasdaq Falls 50
Oct. 17, 2002
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NEW YORK (AP) _ Wall Street made an expected retreat Wednesday on discouraging earnings from Intel and profit taking from a four-day rally that had boosted the Dow Jones industrials nearly 1,000 points.
The Dow fell almost 220 points, its losses widening after President Bush signed a congressional resolution that would allow him to use force if necessary against Iraq.
While the possibility of war and Intel's results weighed on Wall Street, stocks had been expected to pull back after their huge rally. But overall third-quarter earnings are expected to surpass forecasts, which analysts said puts the market in position to continue its advance.
The Dow closed down 219.65, or 2.7 percent, to 8,036.03. On Tuesday, the Dow soared 378 points and closed above 8,000 for the first time in a month; over the previous four sessions, it rose 969.
The broader market was also lower. The Nasdaq composite index sank 50.02, or 3.9 percent, to 1,232.42. The Standard & Poor's 500 index fell 21.25, or 2.4 percent, to 860.02.
Analysts were encouraged by the big four-day rally, especially after weeks of pretty dreadful sell-offs as companies reduced their profit outlooks.
``The market has shown over the past four days that it can rally again. That's good,'' said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.
But analysts also cautioned against investors counting on big gains to swiftly turn the market around.
``You'd be concerned if it went up too fast,'' said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.
After all, stocks have suffered nearly three years of declines and can't be expected to snap back in a matter of weeks.
``This market is going to take some time to prove the bottom and prove it can be stable for a while,'' Belski said.
Belski also noted that the market is susceptible to so-called event risks, namely the possibility of war with Iraq. After Bush signed the congressional resolution, stocks declined further and the Dow, already down about 140 points, fell to a decline of more than 200 points.
Intel dropped $2.98 to $13.54, having announced late Tuesday that earnings missed analysts' expectations by 2 cents a share.
IBM fell $3.58 to $64.90 and Advanced Micro Devices stumbled 71 cents to $3.49 ahead of their earnings results due later in the day.
After the market closed, IBM reported earnings that beat expectations by 3 cents a share, while AMD missed forecasts by 7 cents a share. IBM soared $5.01 in the extended-hours trading session, and AMD gained back 51 cents.
Another of Wednesday's losers, Motorola slid to a 10-year low, down $2.25 at $7.85, after warning that sales and earnings will be weaker than expected in both the fourth quarter and 2003.
Investors took profits from companies responsible for Tuesday's rally. General Motors tumbled $2.56 to $34.14, Johnson & Johnson fell 66 cents to $58.90, and Citigroup declined 29 cents to $33.85. All three beat earnings expectations in reports released Tuesday.
Other issues fell despite positive earnings results Wednesday. Merrill Lynch, which beat estimates by 15 cents a share, slipped 9 cents to $35.90.
Analysts also attributed Wednesday's downturn to investors feeling nervous ahead of Thursday's report from the Federal Reserve on industrial production for September. It is the biggest economic indicator due out this week.
Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Consolidated volume came to 1.94 billion shares, below 2.30 billion on Tuesday.
The Russell 2000 index, the barometer of smaller company stocks, fell 9.67, or 2.7 percent, to 350.85.
Overseas, Japan's Nikkei stock average finished Wednesday up 0.5 percent. In Europe, France's CAC-40 declined 0.6 percent, Britain's FTSE 100 fell 1.8 percent, and Germany's DAX index lost 1.3 percent.
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