GDP, tech stocks drive market down
NEW YORK » Wall Street sank in volatile trading yesterday after the government confirmed that the last quarter of 2007 did indeed suffer a sharp economic slowdown. For the second straight session, the Dow Jones industrial average fell more than 100 points.
The technology sector was particularly weak after business software maker Oracle Corp. posted worse-than-expected fiscal third-quarter sales and issued a cautious forecast. Meanwhile, data suggesting that Google Inc.'s revenue from Internet users' clicks could slow also raised worries about tech stocks.
Oracle fell $1.51, or 7.2 percent, to $19.43, and Google dropped $14.11, or 3.1 percent, to $444.08.
Financial stocks lost ground yesterday as well, with investors uncertain about what is in store for the economy and the troubled financial sector. But the sense of panic that emanated from the near-collapse of Bear Stearns Cos. at the start of last week has lessened, observers say.
"GDP was in line, so we're still expanding, even though we're expanding at a very small rate," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "It's definitely a different mind-set than it was two weeks ago. A lot of smart people are telling us to buy on the dips. I think we'll be fine as long as there is not another Bear Stearns out there."
The Dow fell 120.40, or 0.97 percent, to 12,302.46.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 15.37, or 1.15 percent, to 1,325.76, and the technology-heavy Nasdaq composite index fell 43.53, or 1.87 percent, to 2,280.83. The Russell 2000 index of smaller companies fell 9.72, or 1.38 percent, to 692.39.
Declining issues outpaced advancers by about 5 to 3 on the New York Stock Exchange. Consolidated volume came to 3.90 billion shares, down from 3.99 billion on Wednesday.
Bond prices also fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.52 percent from 3.46 percent late Wednesday. The dollar rose against other major currencies, while gold prices slipped.
Light, sweet crude rose $1.68 to $107.58 a barrel on the New York Mercantile Exchange as investors grew uneasy about Iraqi oil output after the bombing of key pipeline in that country.
While investors appear less cautious than they were after the Fed helped orchestrate the sale of the liquidity-starved Bear Stearns to JPMorgan Chase & Co., there have recently been fresh signs of strain in the economy.
Still, some upbeat news gave investors room for optimism. While it wasn't enough to propel stocks higher, investors appeared pleased by the Labor Department's report that the number of workers seeking unemployment benefits fell last week by a seasonally adjusted 9,000 to 366,000. Though the weekly figures can be volatile, the reading was better than the 371,000 many economists predicted.
George Shipp, chief investment officer at Scott & Stringfellow, said investors generally remain uneasy about whether they have an accurate read on the scale of the troubles in the financial sector.
"It's hard to imagine there is going to be any good news. The question is whether it's been discounted," he said, referring to another round of potentially weak results from big banks in the coming months. "The market is groping for a bottom. It's a difficult time."