NEW YORK: Stocks tumbled to their lowest levels since October on Friday as the specter of a US war against Iraq loomed over a market already spooked by the outlook for corporate profits during the rush of reporting season.
The blue-chip Dow, which lost a whopping 238 points, and the broad Standard & Poors 500 index slammed to three-month lows, while the tech-packed Nasdaq smacked its lowest level this month. Wall Street has endured losses in five of the past six sessions.
Its brutal, completely brutal, said Anthony Iuliano, head equity trader for Glenmede Trust Co.
The Dow Jones Industrial average fell 238.46 points, or 2.85%, to 8,131.01, according to the latest available numbers. The Dow hit its lowest level since Oct 17. All 30 blue-chip components ticked lower.
The Standard & Poors 500 index slumped 25.94 points, or 2.92%, to 861.40, also slamming to its lowest point since Oct 17. The Nasdaq Composite Index dropped 46.14 points, or 3.32%, to 1,342.13.
Investors are on tenterhooks ahead of two events early next week that could determine whether there is war.
UN inspectors, who have spent two months hunting for evidence of banned weapons of mass destruction in Iraq, will present their findings on Monday, and President George W. Bush will make his case against Iraq in his State of the Union address on Tuesday.
War worries plagued Wall Street and other markets around the world as US forces massed in the Gulf and a rift widened between Washington and key allies on whether Iraq should be disarmed by force.
Investors fled to safe-haven bonds and the dollar fell hard, while gold surged to six-year highs and world oil prices spiked.
The market is in desperate need of a resolution of the conflict if it is going to have any chance of mounting a recovery this year, said Harry Michas, stock index futures trader at manmarketmonitor.com.
This week and the next mark the busiest weeks of the fourth-quarter earnings season, and many companies are failing to prove profits are on the mend.
CMS Energy Corp tanked almost 29% and American Electric Power Co Inc fell 4.6% after the utility companies offered bleak outlooks. American International Group Inc sank 8% and Allstate Corp fell 3.6% after Morgan Stanley downgraded insurers, blaming in part a continued weak economy.
Companies are not giving a tremendous amount of visibility for 2003, and considering Iraq still looms, people are getting a little skittish and are taking some money off the table, said Jack Francis, senior Nasdaq trader at UBS Warburg.
For the week, the Dow tumbled 5.3%, the S&P 500 fell 4.5% and the Nasdaq surrendered 2.5%. All three gauges sank for the second straight week.
The Dow and the S&P 500 are in negative ground for the year despite an early January rally. The Nasdaq is up just 0.5% so far in January.
Declining stocks trounced advancers by a ratio of about 3 to 1 on the New York Stock Exchange and Nasdaq. More than 1.53 billion shares changed hands on the Big Board and more than 1.57 billion on Nasdaq in moderate trading.
Corning Inc the worlds largest maker of fiber-optic cable, tumbled 36 cents, or 8%, to US$4 and whacked telecommunications stocks.
Corning posted a net loss and repeated its view that the telecoms sector will not rebound until late next year. The American Stock Exchanges North American Telecom Index fell 2.95%, adding to Thursdays steep decline.
Communications chip maker Broadcom Corp sank US$2.50, or 14%, to US$15.11.
Its chief executive announced his resignation and the company posted a fourth-quarter loss approaching US$2bil, including a massive charge. The Philadelphia Stock Exchanges semiconductor index fell 4.97%.
Utility company CMS Energy tumbled US$2.47 to US$6.07. The company said it would report a large loss for 2002 because of asset write-downs and said it has suspended its dividend to retain cash.
American Electric Power fell US$1.24 to US$25.65. The company said it would cut 1,300 jobs, lower capital spending, sell some assets and likely pare its dividend in order to reduce costs and strengthen its balance sheet. Reuters
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