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Dow dives below 10,000
The index of established stocks falls
Star-Bulletin news services
2.28 percent today and closes below
10,000 for the first time since AprilNEW YORK -- The Dow Jones industrial average closed below the psychologically charged 10,000-level today for the first time since April 1999 as investors continued to put selling pressure on old guards like IBM and 3M.
The Dow fell 230.51, or 2.28 percent, to close at 9,862.12. That brings the Dow's drop for the week to 350 points, and its drop for the year to 1,627 points or 14.2 percent.
"Every time you see the Dow go below 10,000 and such pressure on the old-economy stocks, the overall tone is negative," said Jay Suskind, director of equity trading at Ryan Beck & Co. in West Orange, N.J. Investors might feel they had to sell the computer-related shares that had been leading gains, he said.
The technology-heavy Nasdaq composite index, which closed yesterday at a record high, fell 27.16 today to 4,590.49. Still, the Nasdaq is 12.8 percent higher so far in 2000.
Blue-chip stocks suffered today as traders continued to favor newer companies that promise faster profit growth.
"The correction is simply not over yet as we can see by the continuing pressure on stocks like GE, Coke and Merck," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "People are moving out of the Old Economy into the New Economy."
Investors hammered Dow stalwarts like General Electric, IBM, 3M and Hewlett Packard today.
This morning, the Commerce Department said the economy surged upward at a 6.9 percent annual rate during the final three months of 1999, the strongest pace in more than three years. The big advance in the gross domestic product -- the total output of goods and services -- was even stronger than the 5.8 percent fourth-quarter rate the government previously estimated one month ago.
Such rapid growth has led the Federal Reserve to raise rates four times since June, and warn that more hikes are on the way. The industrial stocks have been hurt in particular by fears of higher rates that would curtail their profits.
Among the big winners of the day were Oracle and Commerce One, which announced they were combining their Internet business exchanges for the automakers General Motors, Ford and DaimlerChrysler.
The news, however, had little bounce for shares of GM and Ford because investors are worried higher interest rates in the future will hurt corporate profits.
The market's decline today "is very troubling," said Hugh Johnson, chief investment officer at First Albany Corp.
"When you get declines of the magnitude we've had this year, it's very demoralizing ... and can invite more selling."
Decliners beat advancers today by a 3-to-2 margin on the New York Stock Exchange, with 1,161 stocks higher, 1,807 lower and 499 unchanged.
Volume on the Big Board equaled 1.06 billion vs. 1.17 billion yesterday.
The S&P 500 lost 20.07, or 1.48 percent, to 1,333.36 and the NYSE composite index dropped 7.15 to 5,776.42.
Two indexes that specialize in smaller companies bucked today's selloff.
The American Stock Exchange composite index rose 7.92 to 943.54 and the Russell 2000 index gained 2.70 points to 556.74
The Amex composite is up 7.6 percent for 2000, while the Russell 2000 is 10.3 percent higher year to date.
Overseas, Japan's Nikkei stock average rose 1.3 percent. Britain's FTSE 100 rose 1.83 percent, Germany's DAX index gained 1.28 percent and France's CAC-40 was up 1.81 percent.