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Dow falls 374; Nasdaq
cracks 5,000, fades

Procter & Gamble's earnings
warning sends stock tumbling 31
and fuels market selloff

Associated Press

NEW YORK -- The Dow Jones industrial average tumbled nearly 375 points today, overshadowing the Nasdaq composite index's first foray past 5,000, after Dow component Procter & Gamble Co. warned its third-quarter earnings will fall far short of expectations.

The Dow fell 374.47 points, or nearly 3.7 percent, to 9,796.03. In late trading, the average was off more than 400 points before regaining some ground. It was the fourth-worst one-day point loss in the Dow's history, but on a percentage basis, the selloff doesn't even crack the worst 25 days for the blue-chip stock index. Much of the Dow's plunge was due to a steep drop in Procter & Gamble, which lost 31 percent of its value, down $27.44 to $60, after warning investors that higher raw materials and manufacturing costs would cause its fiscal third-quarter earnings to fall 10 percent to 11 percent from a year earlier.

Procter & Gamble, whose products include Tide detergent, Crest toothpaste and Pampers diapers, said it expects earnings of 64 or 65 cents per share, well below the 78 cents per share that Wall Street analysts have been expecting.

The warning from the consumer products maker made an already nervous market even more anxious about industrial and financial stocks that have suffered lately while high-tech stocks have flourished.

Worries about first-quarter profits, which companies will begin reporting next month, spread throughout the market, and no stocks, even the high-tech issues, were immune.

The Nasdaq succumbed to the market's uneasiness after having soared more than 100 points in early trading and passing 5,000 for the first time in its 29-year history.

The index spurted 95.28 higher to 5,000.13 within the first half-hour of trading on Wall Street and edged up to a high of 5,006.78 before retreating. It closed down 57.01 at 4847.84. It was just two months ago that the Nasdaq passed 4,000, and four months ago that it crossed 3,000.

The tech-dominated Nasdaq is up 19 percent so far in 2000 and has outperformed the Dow, which is down 14.8 percent year-to-date, and other stock market indicators since late last year.

In other Wall Street action today, the Standard & Poors 500 stock index fell 35.66, or 2.56 percent, to close at 1,355.62. The index is off 7.73 percent so far this year.

Advancers beat decliners by a more than 2-to-1 margin on the New York Stock Exchange, with 967 up, 2,077 down and 445 unchanged. NYSE volume totaled 1.3 billion shares vs. 1.025 billion yesterday. The NYSE composite index fell 15.45, or 2.56 percent, to 588.57; the American Stock Exchange composite index slipped 5.42 to 1,016.94; and the Russell 2000 index fell 6.18, or 1 percent, to end at 595.46.