- The Washington Times - Saturday, January 19, 2002

NEW YORK (AP) Cautious forecasts from Microsoft and IBM sent technology stocks tumbling yesterday as investors worried that an economic recovery might be further delayed. The tech-driven Nasdaq Composite Index closed out its worst week since the terror attacks.

Analysts said the sharp drop was to be expected, given all the buying investors indulged in late last year when they expected business to quickly turn around in 2002.

The tech sector took the brunt of the selling as the Nasdaq fell 55.48, or 2.8 percent, to 1,930.34 and ended the week down 92.12, or 4.6 percent. The last time the Nasdaq had a bigger weekly percentage decline was Sept. 21-28, when it plunged 16 percent after the terror attacks.

The market's other major indexes also posted sharp daily and weekly declines.

The Dow Jones Industrial Average sank 78.19, or 0.8 percent, to 9,771.85, with IBM and Microsoft its weakest components. For the week, the Dow fell 215.68, or 2.2 percent.

The Standard & Poor's 500 index stumbled 11.30, or 1.0 percent, yesterday to 1,127.58. It ended the week down 18.02, or 1.6 percent.

The downturn reflected the market's disappointment with statements from IBM and Microsoft late Thursday in which both companies said they don't know whether a recovery has started. Although the high-tech bellwethers beat earnings expectations, that wasn't enough for Wall Street, which had been buying on the assumption the companies would confirm a turnaround in progress.

IBM fell $5.65 to $114.25, while Microsoft tumbled $3.76 to $66.10. The selling spread to other technology issues as well, including Intel, which issued a similarly cloudy forecast earlier this week. The chip maker, also a Dow industrial, fell $1.05 to $33.48.

"I don't think people were expecting lots of positive comments about an economic recovery, but they were hoping for some glimmer of hope, and so far management has not provided that," said John Forelli, portfolio manager for John Hancock Core Value Fund. "So people are taking profits instead of buying stocks."

A positive report from Sun Microsystems failed to trigger buying. Sun fell 25 cents to $12.12 despite posting a smaller-than-expected loss for its fiscal second quarter and raising its revenue expectations for the third quarter to $3.2 billion from $3.1 billion.

Blue chips experienced widespread weakness, which analysts attributed to the Enron bankruptcy caused by questionable accounting procedures. Fears that struggling retailer Kmart would also file for bankruptcy protection also weighed on investors.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide