Jitters ahead of convention

  • Business
  • Sunday, 25 Jul 2004

By Anna Driver

STOCKS tumbled on Friday after investors were unnerved by disappointing results from Coca-Cola Co and Microsoft Corp and fretted about possible attacks at next week’s Democratic National Convention. 

The technology-heavy Nasdaq Composite index notched a fresh low for the year. The blue-chip Dow closed below the psychologically key 10,000 level for the first time in two months and declined for the fifth week in a row. 

The Standard & Poor’s 500 index logged its sixth consecutive week of losses. 

“Microsoft set the pace for the start of the day, but it’s the Friday ahead of the Democratic convention,” David Hegarty, head of equity trading for Commerzbank Securities, said.  

“We’re continually seeing these investigations into terror-related warnings.” 

US Homeland Security Secretary Tom Ridge earlier this month warned that Osama bin Laden’s al-Qaeda militant group might attack the United States in a bid to disrupt the November election. 

And on Friday the FBI said it was investigating “unconfirmed information” of a possible attack on media vehicles during the convention, which begins in Boston on Monday. 

The Dow Jones industrial average ended down 88.11 points, or 0.88%, at 9,962.36, while the Nasdaq closed off 39.97 points, or 2.12%, at 1,849.28. The S&P 500 Index ended down 10.64 points, or 0.97%, at 1,086.20. 

For the week, the Dow average was down 1.75%, while the Nasdaq fell 1.8% and the broad S&P 500 was off 1.4%. The Dow is down more than 4% for the year, the Nasdaq down 7% and the S&P 500 is down 2%. 

A series of earnings reports and outlooks from major companies that failed to beat Wall Street’s expectations or even missed them had investors worried that profit growth would slow in the rest of the year, traders said. 

Microsoft, the world’s second-largest company by market value, on Thursday said its profit for the year would be weaker than expected as investment income slowed as a result of its huge US$32bil payout to shareholders. 

Coca-Cola reported on Thursday a 16% jump in quarterly net profit, but provided volume figures that fell below expectations. Sanford Bernstein said on Friday it cut its rating on the stock to “market perform” from “outperform”. 

Web retailer Amazon.com posted quarterly profits that were a penny short of Wall Street’s expectations and its forecast for the third quarter also lagged Wall Street expectations. 

Trading was active, with 1.3 billion shares changing hands on the New York Stock Exchange, just shy of the 1.4 billion daily average for last year. 

About 1.7 billion shares were traded on Nasdaq, below the 1.8 billion daily average last year. 

Coca-Cola dropped US$3.80, or 7.8%, to US$45.17, making it the biggest drag on the Dow and the S&P 500. Microsoft fell 97 cents, or 3%, to US$28.03, making it the biggest weight on the Nasdaq. 

Amazon’s stock fell US$5.84, or 12.8%, to US$39.98 on Nasdaq. 

Champion Enterprises Inc, the top US builder of manufactured homes, was the largest percent gainer on the NYSE after posting a sharply higher quarterly profit. The stock ended up 1.88, or 25%, at US$9.55. 

So far in July, the S&P is down nearly 5%. 

If the market stays flat market next week, the loss for the month will be the largest since a 6% decline in December 2002. – Reuters  

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