- The Washington Times - Thursday, March 21, 2002

NEW YORK (AP) A weaker outlook for Intel and the possibility of higher interest rates prompted investors to collect profits yesterday, pushing stocks sharply lower across market sectors.

Wall Street's losses widened throughout the session with the Dow industrials falling more than 135 points and the Nasdaq Composite Index falling to its lowest close in three weeks.

The market's drop followed the Federal Reserve's decision Tuesday to leave interest rates unchanged, although the central bank hinted of possible increases later this year.

"There's a lot of concern that when rates go up, the recovery will slow down," said Stephen Carl, head of U.S. equity trading for the Williams Capital Group LP.

The Dow Jones Industrial Average fell 133.68, or 1.3 percent, to 10,501.57 after rising 57.50 Tuesday to close at its highest level of the year, 10,635.25. The Dow has advanced for five weeks on increasing signs that business is improving.

While stocks rallied Tuesday after the Fed's move affirmed that the recession could soon be over, "we are having afterthoughts today. … Economists believe the Fed will reverse last year's trend of rate cuts with a rate increase in June or September,'' said Alan Ackerman, executive vice president of Fahnestock & Co.

The broader market also declined yesterday. The Nasdaq Composite Index fell 48.00, or 2.6 percent, to 1,832.87, its lowest close since March 1, when it stood at 1,802.74.

The Standard & Poor's 500 Index declined 18.44, or 1.6 percent, to 1,151.85.

Traders said they were concerned that the Fed would raise interest rates before corporate earnings improve, which would make it difficult to justify stocks' current prices.

Intel fell $1.19 to $30.53 after Salomon Smith Barney lowered its second-quarter earnings and revenue estimates for the chip-maker.

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