Closing Market Report

Star-Bulletin news services

Wednesday, June 19, 2002

Stocks fall
on tech warnings

By Lisa Singhania
Associated Press

NEW YORK >> Warnings from Apple, Advanced Micro Devices and Ciena sparked a technology selloff today, sending the Nasdaq composite index to a new low for the year as Wall Street grew more pessimistic about the timing of a business turnaround. The Dow Jones industrials tumbled more than 140 points.

The market's already downward momentum was accelerated by the second suicide bombing in Israel in as many days. Analysts said the crisis gave investors already skeptical about second-quarter earnings another reason to stay away.

The Dow closed down 144.55, or 1.5 percent, at 9,561.57, wiping out more than half of its 231-point gain the first two days of the week. It was the Dow's fifth-triple digit move in seven sessions.

Broader stock indicators also fell. The technology-focused Nasdaq slid 46.13, or 3 percent, to 1,496.83. The last time the Nasdaq closed lower was Oct. 2, when it stood at 1,492.33.

The Standard & Poor's 500 index dropped 17.15, or 1.7 percent, to 1,019.99. The Russell 2000 index fell 6.79 to 462.92.

Trading volume was low, making the market more vulnerable to sharp swings. Declining issues led advancers 3 to 2 on the New York Stock Exchange, where volume was light.

"It is looking like revenues for the second quarter will be a bit lighter than expected," said Christopher Wolfe, equity market strategist for J.P. Morgan Private Bank. "That's not making investors too eager to buy."

Apple Computer tumbled $3.03, or 15.0 percent, to $17.12 after saying revenues and profits would be lower than predicted because of soft demand for its products. A similar warning, as well as prediction of a substantial operating loss, sent Advanced Micro Devices down $1.60, or 15.5 percent, to $8.70.

Ciena fell 44 cents to $3.96 after the company said lower third-quarter revenue was possible because of the difficult telecom environment.

The selling spread to other technology stocks. AMD competitor Intel dropped $1.93 to $20.09 after announcing it is shuttering its Web hosting service and taking a $100 million charge in the second quarter.

And Oracle fell 13 cents to $8.80 after reporting quarterly results in line with expectations, but reducing its outlook for the current quarter because of weak corporate spending.

The news was the latest reminder that a much anticipated turnaround in technology -- and the broader market -- might not happen, or at least might be much less robust than hoped. Stocks have been falling all month on a mix of earnings and profit warnings.

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