- The Washington Times - Friday, June 14, 2002

NEW YORK (AP) Stocks took another nose dive yesterday when a drop in retail sales and reduced outlooks for financial companies prompted investors to again question the pace of the economic recovery. The Dow Jones Industrial Average had its second triple-digit loss in three days.

Selling accelerated in late afternoon after several attempts at a rebound failed.

"There is a lot of uncertainty out there. When you have uncertainty, the market drifts," said Michael Murphy, head trader at Wachovia Securities.

The Dow closed down 114.91, or 1.2 percent, at 9,502.80. The drop erased all of the Dow's 100.45-point advance Wednesday, when stocks rose in a late burst of buying driven by technical factors.

The broader market also declined. The Nasdaq Composite Index fell 22.26, or 1.5 percent, to 1,496.86, offsetting the 21.94 it gained Wednesday.

The Standard & Poor's 500 index stumbled 10.70, or 1.1 percent, to 1,009.56, more than negating Wednesday's gain of 6.66.

A big pull on the market yesterday came from a 0.9 percent decline in retail sales for May. It was the largest drop in six months and was due to decreased spending on cars and clothes, the Commerce Department said.

Retail sales were also weaker than many analysts expected, and overshadowed a positive economic report from the Labor Department, which said wholesale prices fell 0.4 percent in May. The decline in the Producer Price Index, which measures inflation pressures before they reach consumers, beat analysts' forecast of a 0.1 percent increase.

Doubts about the economy, and concerns about a third year of decline on Wall Street, have been big factors in the market's protracted slide. Stocks are headed for their fourth straight weekly decline with the Dow having dropped 8 percent since May 17. The Nasdaq has fallen 14 percent since then, while the S&P has lost nearly 9 percent.

"People are hesitant to make big bets," Mr. Murphy said. "People say we will be lucky to end [the year] up 5 percent."

Investors are also worried about corporate accounting, business ethics, conflicts overseas and the possibility of more terrorism.

"This market is more difficult than past markets. We have always dealt with the economy and earnings, but we never had to worry about people blowing up buildings or airplanes. That is something new that investors have to deal with," Mr. Murphy said.

The string of negative factors has sent the market indexes near the September lows that followed the terrorist attacks. The S&P is closest, standing just 43.76, or 4.5 percent, from its Sept. 21 closing low of 965.80.

Retailing and auto stocks fell after yesterday's retail sales report. Wal-Mart stumbled $1.80 to $56.50, while DaimlerChrysler sank $1.71 to $45.69.

Financial issues fell after Merrill Lynch reduced its yearly earnings estimates on the sector by 2 percent to 3 percent. Morgan Stanley fell $1.46 to $42.29, while Lehman Brothers stumbled $1.34 to $58.02.

In technology, Intel fell 47 cents to $21.11, having disappointed Wall Street last week with a profit and revenue warning. Competitor Advanced Micro Devices declined 28 cents to $9.39, losing most of the 34 cents gained following an upgrade by Prudential Securities.

Among gainers, ImClone regained 25 cents to close at $8.08, as the House held a hearing on charges of insider trading.

Sign up for Daily Newsletters

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