Wall Street for sale

The Dow falls 234 in the third
straight triple-digit selloff

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By Lisa Singhania
Associated Press

NEW YORK >> Wall Street succumbed to more selling today, extending Friday's selloff in a volatile session that saw the Dow Jones industrials drop more than 300 points, rebound and then close down more than 230.

Analysts said the sharp swings reflected investors' uncertainty after nine weeks of declines, including Friday's 390-point plunge in the Dow. Mixed earnings reports affected specific stocks, but failed to give the market a lift.

"Emotions are running high right now, and a quick move to the downside can easily be replaced a move to the upside and vice versa," said Charles G. Crane, strategist for Victory SBSF Capital Management. "People are shooting first and asking questions later."

Declining issues led advancers 4 to 1 on the New York Stock Exchange. Volume came to 2.14 billion shares, compared with 2.63 billion Friday.

The Dow closed down 234.82, or 2.9 percent, at 7,784.44, its third straight triple-digit finish and its lowest close since it reached 7,731.90 on Oct. 8, 1998. It was also the average's first close below 8,000 since Oct. 14, 1998, when it finished at 7,968.80.

The Dow has lost 625.05 points in the last two sessions.

Broader stock indicators also retreated. The Nasdaq composite index was down 36.60, or 2.8 percent, at 1,282.55, and the broader Standard & Poor's 500 index was off 27.92, or 3.3 percent, at 819.83. The Russell 2000 index fell 6.55 to 379.65.

The Nasdaq last closed lower on May 1, 1997 when it was at 1270.50. The last time the S&P closed lower was May 7, 1997 when it stood at 815.62.

The price of the Treasury's 10-year note was up 1/2 point today, while its yield fell to 4.45 percent from 4.52 percent late Friday. Two-year Treasury notes were up 3/32 point and yielded 2.35 percent, down from 2.41 percent late Friday.

The volatility came a day after WorldCom filed for Chapter 11 bankruptcy protection, a move that had been widely expected following the telecommunications company's disclosure nearly a month ago of deceptive accounting practices. The stock rose 5 cents to 14 cents after WorldCom's chief executive said he was optimistic the company would emerge from court protection within 12 months.

Although the WorldCom announcement was significant, analysts said it was not the primary driver for Wall Street's retreat. Rather, they said, investors, fed up with corporate ethics and accounting scandals, are staying away from the market -- or even pulling their money out and shifting into investments perceived as less risky, such as real estate or bonds.

Still, there were still some losses related to the news, particularly among WorldCom's creditors. J.P. Morgan Chase fell $1.58, or 6 percent, to $24.52, while Citigroup dropped $3.96, or 11 percent, to $32.04.

Citigroup was also hurt by a Wall Street Journal report that the National Association of Securities Dealers was preparing a case against its Salomon Smith Barney unit and research analyst Jack Grubman for alleged security rules violations.

Other stocks to record steep declines included Microsoft, which tumbled $3.27, or 6.6 percent, to $46.29, and IBM, which slid $3.50, or 4.9 percent, to $68.50.

Energy issues fell, too. ExxonMobil slid $2.13, or 6.6 percent, to $30.27, while Williams Cos. fell 61 percent, down $3.15 to $2.01, on news the company expects a significant quarterly loss and planned to slash its dividend.

"The market is cautious, and very skeptical right now," said Subodh Kumar, chief investment strategist for CIBC World Markets. "People are focused on in their minds whether the earnings being reported or reliable or not. And when you hear things like big bankruptcies, people tend to get nervous."

The few companies that did manage sharp gains indicated or had news suggesting that higher stock prices might be ahead.

3M advanced 12 cents to $109 after increasing its earnings forecast for the second time this year, following the release of second-quarter earnings that more than doubled on higher sales and improved efficiency.

And Procter & Gamble advanced $3.37 to $77.83 after the personal care products company said it is stepping up its stock buyback program, but remains confident about its business. UBS Warburg also upgraded the stock from "buy" to "strong buy."

Also today, President Bush again expressed confidence that the economy was improving, and said legislation moving through Congress should help increase investors' faith in the stocks.

Stocks have fallen steadily since May 17, the last time the three major indexes posted a weekly advance.

On Friday, the Dow suffered its seventh-largest point drop, falling 390.23, to 8,019.26, a loss of 4.6 percent.The Nasdaq fell by a smaller percentage, 2.8 percent, dropping 37.80 to 1,319.15, and the S&P 500 lost 33.80, or 3.8 percent, to 847.76.

Overseas today, Japan's Nikkei stock average fell 0.1 percent. In Europe, Germany's DAX index lost 5.2 percent, Britain's FTSE 100 slipped 5.0 percent, and France's CAC-40 dropped 5.3 percent.