Warnings,
job cuts
sink stocks

Associated Press

NEW YORK >> Wall Street made an expected retreat today, sending technology and blue-chip stocks sliding on a mix of profit-taking and earnings warnings.

The selloff ended a three-day, 558-point winning streak for the Dow Jones industrials, but the blue chips managed to keep about 70 percent of their gains -- a move some analysts found encouraging.

Some giveback was to be expected after the market's rally.

"You've had a 10 percent run-up in the indexes since last week," said Tom Galvin, chief investment officer at Credit Suisse First Boston. "But certainly the problems in the Nasdaq continue to play on people's fears. We had broad-based selling pressures in technology today."

The Dow closed down 162.19 at 9,785.35. The Standard & Poor's 500 index was off 28.88 at 1,153.29, and the Nasdaq composite index fell 118.13 to 1,854.13.

Decliners led advances nearly 2 to 1 on the New York Stock Exchange, with 1,994 down, 1,084 up and 200 unchanged. Volume was 1.4 billion vs. 1.3 billion yesterday.

The NYSE composite index fell 9.63 to 590.06, the American Stock Exchange composite index dropped 11.15 to 864.81 and the Russell 2000 index lost 10.68 to 442.20. The Treasury's 10-year note rose 18 to 100532; its yield fell 3 basis points to 4.98 percent. The 30-year bond fell 632 to 981932; its yield rose 1 basis point to 5.47 percent.

The selling was no surprise. An earnings warning from Nortel Networks after regular trading ended yesterday sent tech stocks down in the market's extended session, and set Wall Street up for today's selling.

Nortel, which also announced another 5,000 job cuts for a total of 15,000 planned this year, fell 16 percent, down $2.76 at $14. The news hurt other networking stocks, including Cisco Systems, which tumbled $2.38 to $15.75, a 13 percent loss.

Investors also pummeled Palm, which fell $7.44 to $8.06 for a 48 percent loss, after the company announced job cuts and reduced its quarterly forecast. A similar announcement from Disney dropped its stock 84 cents to $28.36.

Beverage and health care stocks were among the few winners, reflecting investors' desire for less risky investments. Adolph Coors rose $2.29 to $65.38, while Merck advanced $1.54 to $75.15.

"The desperation was last week. Now we're finally getting to the acceptance phase. The casino has closed," said Scott Bleier, chief investment strategist at Prime Charter. "You have to let nature take its course. There may be no magic bottom and this may take a while."

Overseas, Japan's Nikkei stock average rose 0.9 percent, or 127.18 points, to 13,765.51.