- The Washington Times - Thursday, July 11, 2002

NEW YORK (AP) Investors hit by yet another disappointment, this time brokerage downgrades of General Motors and Ford, bailed out of stocks again yesterday, sending the Dow Jones Industrials down more than 280 points to close below 9,000 for the first time since October.
The Dow also suffered its biggest one-day point loss since September.
The Nasdaq Composite Index and Standard & Poor's 500 indexes sank to their lowest levels in years as the stock market endured a third straight day of heavy selling fed by bookkeeping scandals and poor prospects for earnings growth. Analysts said investors simply are too downtrodden to buy stocks, even after nearly eight weeks of selling have left prices low.
"This market has completely broken the spirit of investors," said Al Mirman, strategist at V Finance in Sarasota, Fla. "It is going to take a good year for investors' confidence to be reinstated."
The Dow Jones industrial average fell 282.59, or 3.1 percent, to 8,813.50, after dropping 283.41 points over the previous two sessions.
The Dow last closed below 9,000 on Oct. 2, when it stood at 8,950.59 as it was still recovering from its post-September 11 losses. Before the terror attacks, the Dow had not had a lower finish since Dec. 16, 1998, when it stood at 8,790.60.
Yesterday's loss was the Dow's biggest one-day decline since Sept. 20, when it fell 382.92.
The market's broader indicators also dropped. The S&P; sank 32.36, or 3.4 percent, to 920.47, following its two-day loss of 36.20. The S&P; last finished lower Nov. 13, 1997, when it stood at 916.66.
The Nasdaq fell 35.11, or 2.5 percent, to 1,346.01, having lost 67.24 over Monday and Tuesday. The Nasdaq last closed lower on May 19, 1997, when it was at 1,341.24.
Analysts said that investors see virtually no reason to buy stocks now and they will continue to hold off until earnings show decided progress and companies improve the accuracy of the results they release.
"We're getting into earnings season, and more than ever, investors are looking for numbers they can trust," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "The pressure is on for corporations to give as accurate numbers as possible."
While yesterday didn't bring a new accounting fiasco, there was reason to question the strength and pace of a business recovery.
Blue chips, for example, were hurt by General Motors, which slid $3.53 to $47.61, and Ford, down $1.12 at $13.99, after Bank of America downgraded the stocks to "market perform" from "buy."
The investment firm's move left many investors feeling there are few, if any, safe havens in the market. Losses spilled across sectors.
Philip Morris fell $1.52 to $45.17, Honeywell sank $1.31 to $33.53, and American Express tumbled $1.33 to $34.83.
And Merck dropped $2.18 to $43.57 after announcing Tuesday it was postponing for the third time in two weeks the initial public offering of its Medco unit.
Airline stocks closed at or near the lows that followed the terrorist attacks. Delta fell 52 cents to $17.75.
Yesterday's big drop added to nearly two months of stunning declines. The Nasdaq has plunged nearly 400 points, or almost 23 percent, since May 17, the last time all of the market's major indexes ended a week with gains.
Since then, the Dow has fallen more than 1,500 points, or 15 percent, and the S&P; has lost about 190 points, or almost 17 percent.
After a string of accounting debacles and more than two years of declines on Wall Street, Mr. Lydon said: "Confidence is so low that the average investor is saying, 'I am fine keeping (my money) in a money-market account at 1.5 percent. And when I see the worst is over, maybe I'll think about putting more money in the stock market.'"
However, there were some gainers yesterday. Cisco Systems rose 37 cents to $13.51 and Extreme Networks advanced 60 cents to $9.93 after Merrill Lynch raised its near-term rating on the stocks to "strong buy" from "buy."
Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume was relatively heavy at 1.77 billion shares, compared with 1.35 billion on Tuesday.
The Russell 2000 index, which tracks smaller-company stocks, fell 9.47, or 2.2 percent, to 419.78.
Overseas markets were lower, too. Japan's Nikkei stock average finishing down 1.9 percent. In Europe, France's CAC-40 sank 4.3 percent, Britain's FTSE 100 fell 2.7 percent and Germany's DAX index dropped 4.1 percent.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide