Advertisement - Click to support our sponsors.
NEW YORK -- Fears about a harsh economic slowdown and continuing weakness in corporate earnings sent stocks sliding today, with the Dow Jones industrials giving up more than 265 points and the Nasdaq tumbling 7.1 percent to a 21-month low. Nasdaq plunges 7%
to 21-month lowThe tech-heavy index sinks
178.93 points and is now off 42.7%
for the year while the blue-chip
Dow falls 265.44Star-Bulletin news services
Disappointed that the Federal Reserve declined to lower interest rates yesterday and scared that the Fed has acknowledged the economy may be slowing too much and too fast, investors dumped both high-tech shares and blue chips.
The Dow fell sharply, closing down 265.44 at 10,318.93. The Nasdaq composite index, falling for the seventh consecutive session, finished down 178.93 to 2,332.78 -- its seventh-worst percentage loss ever and its lowest level since August 1999. The tech-focused Nasdaq is down 42.7 percent so far this year and has fallen more than halfway from its mid-March record close of 5,048.62.
The broader Standard and Poor's 500 index stumbled 40.86 to 1,264.74.
"Investors are seeing a confirmation from the Fed that the economy is very weak and that earnings are going to be pretty poor and that assistance from the Fed is not going to be right away," said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif.
Decliners outpaced advancers by a slightly more than 2 to 1 margin on the New York Stock Exchange, with 1,933 down, 1,010 up and 371 unchanged. Volume was 1.43 billion shares vs. 1.31 billion yesterday. The NYSE composite index fell 14.89 to 624.97, the American Stock Exchange composite index dropped 27.82 to 853.62 and the Russell 2000 index fell 14.98 to 443.80.
After the market closed today, AT&T Corp. said it would cut its dividend by 83 percent -- the first reduction in the compoany's 125-year history -- from 22 cents to 3.75 cents to save the company about $3.2 billion annually.
Meanwhile, Treasuries rose as forecasts of lower corporate earnings suggested the economy was slowing and inflation won't accelerate.
"The feeling is growing by the minute that we are moving toward a recession, which is forcing people into the bond market," said Alan Koepplin, who has about 40 percent of the $500 million he manages for institutional clients at SG Cowen Asset Management in Treasuries. "It's times like these that make us uncomfortable that we don't have all of our assets in 30-year bonds," he said. The 10-year note rose 1 5/32 to 105 13/32; its yield fell 15 basis points to 5.04 percent. The 30-year bond rose 1 3/32 to 112 13/32; its yield fell 7 basis points to 5.40 percent.
"We've actually had a crash over the last few weeks, not a one-day crash," said Ricky Harrington, a technical stock analyst for Wachovia Securities. "I think we are getting close to a short-term bottom, the beginning of a technical rebound."