NEW YORK >>Worries about technology earnings sent stocks tumbling today as investors, fearful that this spring's rally might have been premature and that the economy has stalled, cashed in more of their profits. Sun eclipses Wall
Street optimism
By Lisa Singhania
Associated PressThe selloff, which sent the Nasdaq composite index down more than 4 percent, followed an earnings warning by tech bellwether Sun Microsystems. Analysts said Sun's news was an unwelcome reminder to Wall Street of how dismal second-quarter results will likely be and renewed doubts about when corporate profits will recover.
The Dow Jones industrial average closed down 166.50 at 10,872.64, a 1.5 percent drop. It was the blue-chip index's lowest close since May 11 and its first finish below 11,000 in two weeks.
Broader stock indicators also dropped sharply. The Nasdaq fell 91.04 to 2,084.50, its lowest close since its 2,081.92 finish on May 14. The technology-focused index, which has fallen the last three sessions, has dropped 10 percent since May 22, when the index closed at a high for the year of 2,313.85.
The Standard & Poor's 500 index slipped 19.85 to 1,248.08, a 1.6 decline and its lowest close since May 11, when the index finished at 1,245.67.
Decliners led advancers 2 to 1 on the New York Stock Exchange, with 1,994 down, 1,065 up and 225 unchanged. Volume was 1.15 billion shares vs. 1.26 billion yesterday.
The NYSE composite index lost 7.01 to 638.11, the American Stock Exchange composite index fell 6.39 to 928.25 and the Russell 2000 index dropped 8.41 to 493.96.
The Treasury's 10-year note rose 2/32 to 96 1/4; its yield fell 1 basis point to 5.50 percent. The 30-year bond rose 9/32 to 93 1/2; its yield fell 2 basis points to 5.84 percent.
"We've really had a slew of negative technology and telecom news and this obviously has caused a pretty significant pullback in the Nasdaq," said Todd Clark, co-head of trading at WR Hambrecht.
"I'm a little bit concerned because we had a nice breakout on the upside a few weeks and, if the market was in good shape, we should have been able to hold those levels. That has not happened."
Investors have been selling tech stocks as part of an expected pullback from the Nasdaq's more than 30 percent rise from early April until mid-May, as well as a Dow advance that allowed the blue-chip index to close above 11,000 two weeks ago for the first time since September.
But the earnings warning late yesterday from Sun exacerbated Wall Street's sense that the worst might not be over for the sector.
The computer server and software manufacturer reduced its already-lowered quarterly estimates, citing surprisingly weak sales in Europe. Sun fell $2.42, a 13 percent decline, to $16.25, compounding a $2.96 loss yesterday.
EMC, which announced plans for 1,100 job cuts yesterday, also slipped again, down $3.04 at $30.95 for a 9 percent drop.
A series of telecom company downgrades by Morgan Stanley Dean Witter added to the pressure, sending JDS Uniphase down $2.23 at $16.94 and Nortel Networks down $1.27 at $13.35.
The tech selling was also felt in the Dow, where losses included Intel, down $1.25 at $26.60, a 4.5 percent decline.
ExxonMobil was one of the few stocks to advance on the Dow, rising $1.07 to $88.77 on news of a 2-for-1 stock split and a 2 cent extra dividend.
Stocks were also weak overseas. Japan's Nikkei stock average slid 280.54 points, or 2.04 percent, to 13,493.35.