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NEW YORK -- Wall Street started 2001 on a dismal note, unnerved by the same problems that sent the market plunging last year. Wall Street starts
2001with a slumpThe Nasdaq plummets 7 percent
as the year's first economic
report signals slowdownAssociated Press
The Nasdaq composite index tumbled 7.2 percent as nervous investors unloaded technology issues while blue chips also fell sharply on similar concerns about profits and the slowing economy. The losses extended a trend that made 2000 the worst year ever for the Nasdaq and the weakest in nearly two decades for the Dow Jones industrials.
The Nasdaq closed down 178.66 at 2,291.86 today. The Dow Jones industrial average fell 140.70 to 10,646.15, a 1.3 percent loss. The Standard & Poor's 500 index was down 2.8 percent, falling 37.01 to 1,283.27.
Declining issues led advancers 3-to-2 on the New York Stock Exchange, with 1,718 down, 1,339 up and 269 unchanged. NYSE volume came to 1.10 billion shares, compared with 1.02 billion Friday.
The NYSE composite index sank 15.12 to 641.75; the American Stock Exchange composite index dropped 14.82 to 882.93; and the Russell 2000 index tumbled 21.04 to 462.49, a 4.4 percent decline.
The price of the Treasury's 10-year note was up 1 point, or $15 per $1,000 in face value; its yield fell to 4.92 percent from 5.10 percent late Friday. Prices and yields move in opposite directions. The 30-year bonds were up 1 26/32 point and yielded 5.34 percent, down from 5.46 percent Friday.
An industry report from the National Association of Purchasing Management showing manufacturing activity in December was at its lowest level in nearly a decade had little apparent effect on the market, but added to the sense that the economy is weakening.
The National Association of Purchasing Management said its purchasing index fell to 43.7 percent in December, down from the 47.7 it reported in November. The December reading was significantly lower than the 47.0 reading analysts had anticipated. An NAPM index above 50 signifies growth in manufacturing, while a figure below 50 means contraction. "This is the lowest the PMI has been since April 1991 when it recorded 42.9 percent," said Norbert J. Ore, who oversees the monthly survey.
Economists agreed, saying the downturn in manufacturing should prompt Federal Reserve policy-makers to take action.
"This is a sign of clear, unambiguous weakness in the economy that's got to put some pressure on the Fed," said Joel Naroff of Naroff Economic Advisors. "It pretty much makes it certain that the Fed is going to move" to cut interest rates when they meet later this month, he added. The report is closely watched because it is one of the first indications of economic activity in December.
"Even though the (stock) market has come down a lot, the short-term news doesn't look positive, so you're not seeing new money coming in off the sidelines," said Robert Harrington, head of listed equity trading at UBS Warburg. "Investors are reluctant to commit. They are genuinely concerned about the slowdown in the economy, and the bad news doesn't give them a reason to act any differently."