General depression
sinks market

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By Amy Baldwin
Associated Press

NEW YORK >> Investors hit by yet another disappointment, this time brokerage downgrades of General Motors and Ford, bailed out of stocks again today, sending the Dow Jones industrials down more than 280 points to close below 9,000 for the first time since October.

The Nasdaq composite and Standard & Poor's 500 indexes hit new five-year lows as the stock market endured a third straight day of heavy selling fed by bookkeeping scandals and poor prospects for earnings growth. Analysts said investors simply are too downtrodden to buy stocks, even after nearly eight weeks of selling have driven prices lower.

"This market has completely broken the spirit of investors," said Al Mirman, strategist at V Finance in Sarasota, Fla. "It is going to take a good year for investors' confidence to be reinstated."

Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. The Dow plunged 282.59, or 3.1 percent, at 8,813.50, after falling 283.41 over the previous two sessions.

The Dow last closed below 9,000 on Oct. 2 when it stood at 8,950.59 as it was still recovering from its post-Sept. 11 losses. Before the terror attacks, the Dow had not had a lower finish since Dec. 16 1998 when it stood at 8,790.60.

The market's broader indicators also dropped. The S&P sank 32.36, or 3.4 percent, to 920.47, following its two-day loss of 36.20. The S&P last finished lower on Nov. 13 1997, when it stood at 916.66.

The Nasdaq fell 35.11, or 2.5 percent, to 1,346.01, having lost 67.24 over Monday and yesterday. The Nasdaq last closed lower on May 19, 1997, when it was at 1,341.24.

The Russell 2000 index fell 9.47, or 2.2 percent, to 419.78.

The price of the Treasury's 10-year note was up 25/32 point today, while its yield fell to 4.62 percent from 4.73 percent late yesterday. Two-year Treasury notes were up 7/32 point and yielded 2.58 percent, down from 2.70 percent yesterday.

Analysts said investors see virtually no reason to buy stocks now, and that they will continue to hold off until earnings show decided progress and companies improve the accuracy of the results they release.

While today didn't see a new accounting fiasco, there was reason to question the strength and pace of a business recovery. Blue chips, for example, were hurt by General Motors, which slid $3.53 to $47.61, and Ford, down $1.12 at $13.99, after Banc of America downgraded the stocks to "market perform" from "buy."

The investment firm's move left many investors feeling that there are few, if any, safe havens in the market. Losses came across sectors.

Philip Morris fell $1.52 to $45.17, Honeywell sank $1.31 to $33.53, and American Express tumbled $1.33 to $34.83. And, Merck dropped $2.18 to $43.57 after announcing yesterday it was postponing for the third time the initial public offering of its Medco unit.

Today's big drop added to nearly two months of stunning declines. The Nasdaq has plunged nearly 400 points, or almost 223 percent, since May 17, the last time the market's major indexes ended a week with gains. Since then, the Dow has fallen more than 1,500 points, or 15 percent, and the S&P has lost about 190 points, or almost 17 percent.

However, there were some gainers. Cisco Systems rose 59 cents to $13.73, and Extreme Networks advanced 65 cents to $9.98, after Merrill Lynch raised its rating on the stocks to "strong buy" from "buy."

Overseas, markets were lower with Japan's Nikkei stock average finishing down 1.9 percent. In Europe,France's CAC-40 sank 4.3 percent, Britain's FTSE 100 fell 2.7 percent, and Germany's DAX index dropped 4.1 percent.