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Dow plunges 218
to lapse into correction

The blue-chip index has fallen
11% off its peak; the high-flying
Nasdaq sinks 89 points

Associated Press

NEW YORK -- Stocks fell sharply today, pushing the Dow Jones industrial average into what market watchers consider a correction.

The drop came despite a report of a welcome slowdown in retail sales, as investors dumped technology shares to collect profits from their recent rally.

The Dow tumbled 218.42, or 2 percent, to close at 10,425.21. The blue-chip index is now more than 11 percent below its Jan. 14 closing record of 11,772.98. Analysts consider a drop of at least 10 percent a correction, which signifies a reversal of a market trend but doesn't necessarily mark a long-term change.

The Standard & Poor's 500 fell 29.71, or 2.1 percent, to 1,387.12, and the Nasdaq composite index fell 89.38 to 4,396.25.

Declining issues outnumbered advancers by a 2-to-1 margin on the New York Stock Exchange, with 1,970 stocks down, 1,061 up and 454 unchanged. NYSE volume totaled 1.025 billion shares vs. 1.05 billion yesterday.

The NYSE composite dropped 9.97 to 604.46; the American Stock Exchange composite index fell 3.52 to 889.47; and the Russell 2000 index of smaller companies slipped 5.11 to 537.10.

The price of the Treasury's 30-year bond rose 29/32 point, or $9.06 per $1,000 in face value; its yield fell to 6.27 percent from 6.44 percent late yesterday. Prices and yields move in opposite directions.

On Wall Street, Microsoft Corp. dealt the sharpest blow to the three major indexes. The company's stock sank after the Gartner Group, an information technology consulting company, said many companies are likely to experience problems installing Microsoft's new Windows 2000 software. The long-delayed release of Windows 2000 is scheduled for release next week.

Beyond Microsoft, the technology sector dropped as investors took profits from some of the largest, most widely held stocks. Cisco Systems and Hewlett Packard were among the losers.

"What we are getting is some very, very long overdue profit taking in the superstars in the technology and Internet sectors," said Alfred E. Goldman, chief market strategist, A.G. Edwards & Sons Inc. "The question is whether or not this is going to be a half-a-day phenomenon, or a week- or two-week pullback."

In recent sessions, technology stocks have regained the strength they exhibited in late 1999, when the tech-laden Nasdaq sped past every other market indicator to finish the year with an 85.6 percent gain.

The latest run set up the sector for today's bout of profit-taking, analysts said. Technology is playing such a dominant role in the market that when those shares hit a rare patch of trouble, the broader market tumbles as well.

That was the case today, as blue-chips like Merck and DuPont fell, unable to attract any of the investors fleeing the technology group.