- The Washington Times - Wednesday, December 4, 2002

NEW YORK (AP) A disappointing outlook from AOL Time Warner put investors on the defensive yesterday, prompting them to question the strength of other big companies and bid stocks sharply lower.
The downturn, which extended a decline that began Friday, wasn't surprising given how far stock prices have come recently, with the Dow Jones industrials posting eight straight weekly wins and the broader market advancing for seven of the past eight weeks.
While investors are growing more confident about the economy and earnings, they are expected to cash in some profits, especially amid the uncertainty over whether there will be a war with Iraq.
"At these levels, the market is in pullback mode," said Gary Kaltbaum of Investors' Edge Partners in Orlando, Fla.
The Dow closed down 119.64, or 1.4 percent, at 8,742.93, for a three-day loss of 188.75.
The broader market also retreated. The Nasdaq composite index fell 35.82, or 2.4 percent, to 1,448.96. The Standard & Poor's 500 index declined 13.78, or 1.5 percent, to 920.75.
The Russell 2000 index was down 7.71, or 1.9 percent, at 400.83.
Investors sold off AOL, down $2.36 at $14.21, after the company affirmed the 2002 earnings forecast for its America Online unit but warned of sinking advertising revenues for the year ahead.
Wall Street's losers also included companies scheduled to issue earnings outlooks later in the week, a sign that investors were feeling skittish about the health of other big companies.
Dow industrial Merck dropped $1.13 to $58.82 ahead of its yearly forecast. The drug maker's shares fell as much as $4.79 earlier in the session but then partially recovered after the company said, ahead of its meeting with analysts today, that it was reaffirming its outlook.
Intel, also a Dow stock, fell 74 cents to $20.31 ahead of today's midquarter update.
Investors also punished Ford, which fell $1.49 to $9.96 after posting a 21 percent drop in November auto sales.
Supermarket operator Albertson's fell $1.31 to $22.26 on a downgrade from J.P. Morgan, while Marriott International declined $1.22 to $34.47 on a downgrade from Deutsche Securities.

Because the market can't be expected to go up every day, analysts said the market's slippage moderate and on light volume was necessary.
"The market has gotten a little extended here without resolution to the Iraq conflict," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "We have gone beyond or at the threshold of where the market is comfortable going right now."
But there were some gainers on Wall Street, including Citrix Systems, up $1.26 at $12.69 after raising its fourth-quarter earnings estimate.
Declining issues outpaced advancers 9 to 5 on the New York Stock Exchange. Trading volume was light at 1.44 billion shares, down from 1.61 billion on Monday.
Overseas, Japan's Nikkei stock average finished Tuesday up 0.3 percent. In Europe, France's CAC-40 fell 2.3 percent, Britain's FTSE 100 lost 1.9 percent and Germany's DAX dropped 3 percent.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide