- The Washington Times - Wednesday, June 12, 2002

NEW YORK (AP) A spate of disappointments in the pharmaceutical and biotech sectors triggered a broad sell-off on Wall Street yesterday, sending the Dow Jones Industrial Average, Nasdaq Composite and Standard & Poor's 500 indexes to their lowest closes of the year and near the lows that followed the terrorist attacks.
The drop wiped out what had been a rally early in the session, the second such pullback in as many days. Analysts said the defeat showed again how risk-averse investors have become although the corporate news yesterday wasn't particularly bad, investors decided they were better off selling and locking in whatever profits they might have had.
"People are still scared to make a bet on the future at this point," said Rafael Tamargo, director of equity research at Wilmington Trust.
The Dow closed down 128.14, or 1.3 percent, at 9,517.26, according to preliminary calculations, after rising as much as 113 points earlier. The last time the Dow had a weaker finish was Nov. 5, when the blue chips stood at 9,441.03.
Broader stock indicators also retreated. The Nasdaq fell 33.51, or 2.2 percent, to 1,497.18. The last time the Nasdaq closed lower was Oct. 2, when it stood at 1,492.33.
The S&P; lost 17.14, or 1.7 percent, to 1,013.60. The last time the S&P; closed lower was Sept. 26, when it stood at 1,007.04.
Abbott Laboratories plunged $7.37, or 16.1 percent, to $38.30 after the drug maker reduced its 2002 forecast because a one-time charge of $140 million relating to a consent decree with the U.S. Food and Drug Administration concerning quality-control problems at one of its plants. Sales of an anti-obesity drug haven't been as high as hoped either.
GlaxoSmithKline fell $1.89, or 4.6 percent, to $39.12 on published reports that litigation might be necessary to resolve a tax dispute with the Internal Revenue Service.
And Merck tumbled $2.42, or 4.5 percent, to $51.88 after reaffirming its outlook for the quarter and year, but announcing it would wait until next year to submit a new application for an arthritis drug that it had withdrawn in March.
Biotechs also struggled, including Idec, which fell $6.34 to $32.03 on news that Medicare won't start covering Zevalin, its cancer drug, until October.
The selling spread to the technology sector. Chip maker Intel fell 85 cents to $20.22, while optical networking company Ciena tumbled 35 cents to $4.62.
Analysts say the market's inability to hold any gains reflects the considerable doubt and uncertainty on Wall Street. After two years of losses, many investors were already inclined to stay away. The combination of sluggish earnings, corporate bookkeeping scandals and terrorism fears has given them even more reasons to do so. Yesterday's pullback coincided with another suicide-bombing attack in Israel.
"Right now we're scrambling to come up with some good reasons to buy stocks," said Bob Dickey, managing director of technical analysis at RBC Dain Rauscher. "It's a wait-and-see market. Even though there's talk that second-quarter reports will improve, a lot of people are going to wait even longer to buy stocks to make sure that things aren't going to get worse."
Among gainers, mobile-phone maker Nokia rose 55 cents to $12.55 after it reduced its revenue outlook for the second quarter but said it will still meet earnings targets.
Investors also bid Nextel Communications higher after the wireless communications company said business was improving and that it expected to meet its 2002 forecast. The stock rose 63 cents to $4.42.
Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to 1.39 billion shares, compared with 1.22 billion Monday.
The Russell 2000 index fell 6.51 to 462.78.
Overseas, Japan's Nikkei stock average rose 0.7 percent. In Europe, Germany's DAX index increased 0.4 percent, Britain's FTSE 100 gained 0.1 percent, and France's CAC-40 advanced 2.1 percent.


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