- The Washington Times - Tuesday, May 7, 2002

NEW YORK (AP) With no upbeat news to cheer Wall Street yesterday, investors once again sold off stocks, sending the Nasdaq Composite Index to its lowest close in nearly seven months. The Dow industrials sank nearly 200 points, recording their poorest finish in nearly three months.
"There are two things at hand. Number one, earnings stink. The second is [high] valuation," said Gary Kaltbaum, market technician for Investors' Edge Partners in Orlando, Fla. "Put those two together, you end up with a lethal combination and the rough-tough trading we have been seeing."
The Dow closed down 198.59, or 2.0 percent, at 9,808.04 its lowest close since Feb. 19, when it was at 9,745.14.
The market's other major indicators also finished with sharp losses. The Nasdaq Composite Index fell 34.55, or 2.1 percent, to 1,578.48 its lowest close since Oct. 9, when it stood at 1,570.19. The Nasdaq has been extremely weak, falling now for 12 of 14 sessions and the last four in a row.
The Standard & Poor's 500 index fell 20.76, or 1.9 percent, at 1,052.67, having slipped 0.3 percent last week. The Russell, the barometer of smaller-company stocks, finished down 9.41, or 1.8 percent, at 502.91.
Analysts say the market will continue to struggle for gains until investors are assured that business is improving. There was no such news yesterday.
The market was also anxious about a meeting today by the Federal Reserve Open Markets Committee. Wall Street is nervous about when the Fed will start raising rates again, and will be looking for any indications that could happen before the economy has decisively improved.
Investors dealt with their qualms by again unloading stocks, which they've been doing for weeks as companies reported lackluster first-quarter earnings and failed to offer positive forecasts for future results.
Technology has been on a steady decline throughout 2002 as the market expects it will be the last to emerge from recession. The Nasdaq has plummeted 23.4 percent from its high close for the year 2,059.38 back on Jan. 4.
As for individual issues, EarthLink yesterday fell 87 cents to $7 after President Michael S. McQuary resigned for personal reasons.
Network-equipment maker Cisco Systems declined 25 cents to $12.89 in advance of its third-quarter results, expected out today.
Blue chips posted widespread losses, illustrating the vastness of investors' skepticism even where the safer havens are concerned. Caterpillar fell $1.60 to $52.40, ExxonMobil declined $1.34 to $39.25 and Home Depot fell $1.80 to $44.70.
After weeks of heavy selling, the market theoretically might be poised for a rally. But Wall Street isn't capable of sustaining any upturn, analysts said, until companies offer upbeat outlooks.
"You might see a little move lower and another move a little higher," said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky. "You are in for another frustrating trading range."
Declining issues outnumbered advancers slightly more than two to one on the New York Stock Exchange.
Volume was light at 1.10 billion shares, below Friday's 1.29 billion.

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