IBM sinks Dow’s
bid for 10,000

NEW YORK -- The Dow Jones industrial average failed for the third time this week to close above 10,000, after an analyst cut his price estimate for International Business Machines Corp. on concern that computer sales are slowing.

The Dow average slumped in late trading, closing 94.07 lower at 9,903.55 after jumping to a record 10,085.31 in the first seven minutes of the session. The average crossed 10,000 for the first time during trading on Tuesday. Yesterday, it came within three points of closing above 10,000 after briefly topping the milestone near the close of trading.

"The market's richly valued, and tech companies are even more richly valued," said Henry Cavanna, a money manager for J.P. Morgan Investment Management Inc., which oversees more than $300 billion. Companies in the Standard & Poor's 500 index trade at about 26 times estimated earnings, a record, according to First Call Corp.

The Standard & Poor's 500 index fell 17.26 points, or 1.3 percent, to close today at 1,299.27.

The Nasdaq composite index lost 41.47, or 1.7 percent, to 2,421.49, its worst decline in a month.

For the week, the Dow average rose 0.3 percent, the S&P 500 rose 0.4 percent and the Nasdaq Composite rose 1.7 percent.

Declining beat advancers by a 3-to-2 margin on the New York Stock Exchange, with 1,808 down, 1,163 up and 577 unchanged. NYSE volume totaled 917.30 million shares vs. 831.04 million the previous session.

The NYSE composite index fell 6.93 to 610.68, and the American Stock Exchange composite index declined 2.99 to 711.87. The Russell 2000 index of smaller companies fell 2.97 to 396.58.

The price of the Treasury's main 30-year bond was off 25/32 point, or $7.81 per $1,000 in face value, by late afternoon, while its yield rose to 5.54 percent from 5.49 percent late yesterday. Prices and yields move in opposite directions.

Today was a "triple witching" session, marking the expiration of stock and index options and futures. Markets can be volatile on expiration days as investors buy or sell stocks and options to reverse earlier bets.

IBM was the biggest contributor to the Dow average's decline, tumbling $9.25 to $168.371/2 after Morgan Stanley Dean Witter & Co. analyst Thomas Kraemer trimmed his 12-month forecast for the stock to $195 from $210. He cited concern that revenue from mainframe computers won't meet expectations. Price cuts by rivals Hitachi Ltd. and Fujitsu Ltd.'s Amdahl Corp. are causing IBM to lower mainframe prices.