- The Washington Times - Friday, December 14, 2001

NEW YORK (AP) Profit warnings from Ciena and Lucent Technologies, along with news of more layoffs and deteriorating retail sales, unnerved Wall Street yesterday and prompted heavy selling.
The spate of negative news indicated that parts of the economy are likely to remain weak early in 2002, a disappointment to investors who have been buying stocks for weeks on increasing confidence of an impending economic recovery.
"People want to see some less negative profit numbers, as well as the first sign that profits are going to return to positive in the foreseeable future," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.
The Dow Jones Industrial Average closed the session down 128.36, or 1.3 percent, at 9,766.45.
The broader market, with a greater percentage of technology stocks than the Dow, suffered the most from the profit warnings. The Nasdaq composite index dropped 64.87, or 3.2 percent, to 1,946.51, and the Standard & Poor's 500 index fell 17.69, or 1.6 percent, to 1,119.38.
But analysts added that yesterday's batch of discouraging reports don't mean the economy isn't going to improve and that investors should remember that a recovery takes time.
"What individual investors and portfolio managers alike have to get used to is that this is a transitional market," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray. "Companies are still in the cleanup process."
The market's losses were widespread yesterday with the sharpest declines coming from sectors that indicated business will remain tough into 2002.
Technology suffered from a first-quarter earnings warning from Ciena, along with an announcement of 1,700 job cuts by Applied Materials on Wednesday after the market closed.
Yesterday, networker Ciena slid almost 17 percent, down $3.03 to $14.94, and chip equipment maker Applied Materials fell $3.79 to $41.08.
Other networking and semiconductor stocks fell. Broadcom dropped $3.48 to $42.47, and PMC-Sierra sank 16.5 percent, down $4.63 to $23.39.
Telecommunications stocks declined on a first-quarter profit warning from Lucent, which plunged nearly 16 percent, down $1.21 at $6.52. Competitor Motorola stumbled 77 cents to $16.15.
Among blue chips, investors punished retailers following a Commerce Department report that retail sales plunged 3.7 percent in November. Best Buy fell $1.15 to $66.05, and Wal-Mart declined 97 cents to $53.36.
Aetna slipped 30 cents to $30.74 after the health-care provider announced it was cutting 6,000 jobs, or 16 percent of its work force.

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