Closing Market Report

Star-Bulletin news services

Monday, July 23, 2001

Earnings fears
drop markets

By Amy Baldwin
Associated Press

NEW YORK >> The stock market fell sharply today as skittish investors sized up more second-quarter earnings and braced for the likelihood that the economic slowdown will mean another spate of profit warnings.

Yet there were no major earnings disappointments that drove prices downward, a sign that investors see little reason to buy stocks.

"There's absolutely no urgency. The frustration level in the marketplace is extreme," said Scott Bleier, chief investment strategist for Prime Charter Ltd.

The Dow Jones industrial average finished the day down 152.23, or 1.4 percent, at 10,424.42, according to preliminary calculations.

The broader market also finished lower with the Nasdaq composite index falling 40.81, or 2.0 percent, to 1,988.56 and the Standard & Poor's 500 index declining 19.82, or 1.6 percent, to 1,191.03. Declining issues outnumbered advancers 3 to 2 on the New York Stock Exchange, with 1,197 rising, 1,921 falling and 186 unchanged. Volume came to 1.14 billion shares.

The Russell 2000 index, which tracks the performance of smaller company stocks, fell 5.23 to 482.70. The NYSE composite index fell 8.21 to 608.48, and the American Stock Exchange composite index dropped 7.67 to 889.65.

The price of the U.S. Treasury's 10-year note rose 7/32 to 99 8/32, while its yield fell 3 basis points to 5.098. The price of the 30-year note rose 10/32 to 97 26/32 and its yield fell 2 basis points to 5.525.

Hopes that earnings and the economy would improve by yearend have dimmed in recent weeks as more than 800 companies warned of shrinking profits and many others said business is so uncertain they can't make accurate projections.

"We are all starved for pieces of good information to make us feel better, but that information is just not there yet," said Charles White, portfolio manager for Avatar Associates.

But analysts were doubtful any losses -- or gains -- would be long lasting, given how the market has reacted recently, canceling out its losing and advancing sessions as companies report their second-quarter earnings results.

Analysts also believe the market could still trend higher in the fourth quarter, when companies' profits will look better when compared with the weakened results of the last three months of 2000.

"The economy is in a rough road. You are still making comparisons over a good (quarter) last year," said Al Mirman, market strategist at V Finance in Sarasota, Fla.

However, analysts have been encouraged that the market hasn't fallen harder on big earnings warnings.

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