- The Washington Times - Wednesday, May 22, 2002

NEW YORK (AP) Growing fearful of terror attacks, investors opted for safety yesterday, securing profits and sending stocks sharply lower for a second day. The market's uneasiness wiped out early gains prompted by better-than-expected retail earnings and a settlement for Merrill Lynch.
Analysts said the pullback, although expected after last week's big rally, was exacerbated by fears of more attacks. Wall Street's losses widened yesterday after the FBI warned New York law enforcement officials of an uncorroborated threat of terrorism involving landmarks like the Statue of Liberty and the Brooklyn Bridge.
"It's more of the geopolitical fears. Most of the corporate news is positive. The retail stores beat expectations, and so the consumer is still in the market. But there's lot of rhetoric about the next terrorism attack when it will be, and where," said Arthur Hogan, chief market analyst at Jefferies & Co.
The technology sector registered the steepest drop, having enjoyed the biggest surge last week. The Nasdaq Composite Index closed down 37.41, or 2.2 percent, at 1,664.18. Combined with Monday's 39.80-point decline, the Nasdaq has lost more than half of last week's advance of 140.54.
The market's other major indexes also slid. The Dow Jones Industrial Average fell 123.79, or 1.2 percent, to 10,105.71. The Dow added to Monday's 123-point drop, having lost more than half of last week's gain of 413.16.
The Standard & Poor's 500 index sank 12.00, or almost 1.1 percent, to 1,079.88.
It was the second straight day that fears about terror attacks prompted selling. On Monday, stocks fell after the FBI said suicide bombings in the United States were inevitable and Vice President Richard B. Cheney on Sunday warned that terrorism threats should be taken seriously.
"There is so much caution in the air. The mounting anxiety of terror attacks and the uneven economic recovery have been responsible for a rather-be-safe-than-sorry mode," said Alan Ackerman, executive vice president of Fahnestock & Co.
Retailing shares fell despite a string of better-than-expected first-quarter earnings that included those of Home Depot and Target.
Home Depot sank $3.60, or 7.4 percent, to $44.90 as its shares were downgraded by A.G. Edwards to "hold" from "buy." Target fell $1.16 to $41.54.
Technology gave back some gains from last week when good news, such as better-than-expected earnings from Applied Materials and Dell Computer, prompted buying. Applied Materials fell 47 cents to $26.31, and Dell, which also issued an upbeat outlook last week, stumbled 35 cents to $26.88.
IBM fell $1 to $83.45, having last week rallied on promises to cut costs. Microsoft dropped $1.82 to $52.19 after announcing it would spend $2 billion over five years in an effort to boost sales of its Xbox video game console.
But yesterday's session produced some gainers, although no sector managed a universal advance.
Merrill Lynch rose 47 cents to $43.85 after settling charges by New York Attorney General Eliot Spitzer that it misled investors with its stock ratings to garner lucrative investment banking fees.
But Merrill Lynch's competitors pulled back with Goldman Sachs falling $1.04 to $79.20, and Morgan Stanley declining 96 cents to $48.39.
The auto sector also was mixed. Ford advanced 85 cents to $17.58 after Merrill Lynch raised its near-term rating to "strong buy" from "neutral." But General Motors fell 93 cents to $64.94.
Declining issues outnumbered advancers nearly 2 to 1 on the New York Stock Exchange.

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