Investors
bail out
of stocks

The Dow plunges 292 and
the Nasdaq sinks 110 as
the market selloff intensifies

By Lisa Singhania
Associated Press

NEW YORK >> Wall Street fell back into a deep slump today as a seemingly relentless stream of earnings warnings sent the Dow Jones industrials tumbling nearly 350 points and the Nasdaq composite index down more than 100.

The dispute between the United States and China over a grounded U.S. spy plane added to the market's uneasy mood.

The Dow recovered from its lows of the day, but still closed down 292.22, or 3.0 percent, at 9,485.71, compounding a 100-point loss yesterday.

The Standard & Poor's 500 index slid 39.41, or 3.4 percent, to 1,106.46. The Nasdaq was off 109.97, or 6.2 percent, at 1,673.00, putting it at its lowest point since October 1998.

Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange, with 2,355 down, 759 up and 183 unchanged. Volume ws 1.6 billion shares vs. 1.25 billion yesterday.

The NYSE composite index fell 17.21 to 572.08, the American Stock Exchange composite index dropped 22.62 to 832.24 and the Russell 2000 index lost 12.80 to 426.96.

The Treasury's 10-year note rose 1232 to 100 1832; its yield fell 5 basis points to 4.93 percent. The 30-year bond rose 732 to 98 1932; its yield fell 2 basis points to 5.47 percent.

Today's decline showed that Wall Street is still mired in the pessimism over earnings and the economy that dominated the month of March, sending the Dow briefly into bear market territory and solidly planting the S&P 500 there.

The stock market's edginess also reflected nervousness about the U.S. spy plane that remained grounded in China. The country's president today demanded the United States stop surveillance flights after a collision between the plane and a Chinese fighter jet.

"I can't pin this on any one specific event," said Charles G. Crane, strategist for Spears, Benzak, Salomon & Farrell, a division of Key Asset Management. "Certainly, there's concern about what's going on in China. But this mostly is the ongoing reports and worries about what the first quarter is going to look like and how it will set the tone for the rest of the year."

Investors braced themselves for this month's first-quarter reports, their anxiety intensified by the latest round of earnings warnings.

Ariba slipped $2.00 to $4.44, a 31 percent decline, in a loss that began late yesterday after the business transaction software company reduced its quarterly outlook and said it will cut 700 jobs because of a dropoff in sales. BroadVision, another provider of e-commerce to business, fell $1.53, or 34 percent, to $2.97 after lowering its quarterly expectations, citing sluggish demand.

These companies joined a variety of other companies, including high-tech concerns and blue-chip stalwarts such as American Express and Procter & Gamble, that have warned of disappointing earnings this year.

"It's the continued earnings surprises on the downside," said Matt Brown, head of equity management for Wilmington Trust. "What hurts even more is the outlook -- right now there's no visibility as to when this economy is going to turn around."

Technology losses helped pull the Dow lower, as well. IBM fell $4.27 to $90.39, while Hewlett-Packard lost $1.51 to $27.41.

Investors also punished U.S. automakers, which reported domestic sales in March fell by 9 percent. That result was better than expected, but not good enough for Wall Street. General Motors dropped $1.10 to $50.93.

Even Dow stocks usually popular with investors in uncertain economic times suffered. Philip Morris fell $1.68 to $44.51, while drug maker Merck slid $1.44 to $72.81.

Market watchers said the lack of any reason to buy was further depressing stocks. The Federal Reserve isn't expected to cut interest rates for another month and investors are worried stock prices will fall futher when earnings reports start coming out. Then there is the issue of federal income taxes, which are due April 16.

"It's just seasonally a time where investment decreases in financial markets owing to the need of cash tax payment," said A.C. Moore, chief investment strategist for Dunvegan Associates.

Meanwhile, Dow Jones News reported after the market closed today that American International Group has offered to buy American General Corp. for $23 billion, or $46 a share.

The Dow is now down 19 percent from its closing high of 11,722.98 reached in January 2000, while the Nasdaq is off nearly 67 percent from its March 2000 peak of 5,048.62. The S&P is off more than 27 percent from its March 2000 high of 1,527.46.

Overseas, Japan's Nikkei stock average rose 1.4 percent. European markets were mainly lower, however. Germany's DAX index fell 3.6 percent, Britain's FT-SE 100 closed down 2.8 percent, and France's CAC-40 slipped nearly 4.0 percent.