- The Washington Times - Thursday, October 17, 2002

NEW YORK (AP) Wall Street made an expected retreat yesterday on discouraging earnings from Intel and profit taking from a four-day rally that had boosted the Dow Jones Industrial Average nearly 1,000 points.
The Dow fell almost 220 points, its losses widening after President Bush signed a congressional resolution that would allow him to use force if necessary against Iraq.
While the potential of war and Intel's results weighed on Wall Street, stocks had been expected to pull back after their huge rally. But overall third-quarter earnings are expected to surpass forecasts, which analysts said puts the market in position to continue its advance.
The Dow closed down 219.65, or 2.7 percent, to 8,036.03. On Tuesday, the Dow soared 378 points and closed above 8,000 for the first time in a month; over the previous four sessions, it rose 969.
The broader market was also lower. The Nasdaq Composite Index sank 50.02, or 3.9 percent, to 1,232.42. The Standard & Poor's 500 index fell 21.25, or 2.4 percent, to 860.02.
Analysts were encouraged by the big four-day rally, especially after weeks of dreadful sell-offs as companies reduced their profit outlooks.
"The market has shown over the past four days that it can rally again. That's good," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray.
But analysts also cautioned against investors counting on big gains to swiftly turn the market around.
"You'd be concerned if it went up too fast," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.
After all, stocks have suffered nearly three years of declines and can't be expected to snap back in a matter of weeks.
"This market is going to take some time to prove the bottom and prove it can be stable for a while," Mr. Belski said.
He also noted that the market is susceptible to so-called event risks, namely the potential of war with Iraq. After Mr. Bush signed the congressional resolution, stocks declined further and the Dow, already down about 140 points, fell more than 200 points.
Intel dropped $2.98 to $13.54, having announced late Tuesday that earnings missed analysts' expectations by 2 cents a share.
IBM fell $3.58 to $64.90 and Advanced Micro Devices stumbled 71 cents to $3.49 ahead of their earnings results due later in the day.
After the market closed, IBM reported earnings that beat expectations by 3 cents a share, while AMD missed forecasts by 7 cents a share. IBM was up $1.60 in the extended-hours trading session, and AMD gained back 31 cents.
Another of yesterday's losers, Motorola slid to a 10-year low, down $2.25 at $7.85, after warning that sales and earnings will be weaker than expected in both the fourth quarter and 2003.
Investors took profits from companies responsible for Tuesday's rally. General Motors tumbled $2.56 to $34.14, Johnson & Johnson fell 66 cents to $58.90, and Citigroup declined 29 cents to $33.85. All three beat earnings expectations in reports released Tuesday.
Other issues fell despite positive earnings results yesterday. Merrill Lynch, which beat estimates by 15 cents a share, slipped 9 cents to $35.90.
Analysts also attributed yesterday's downturn to investors feeling nervous ahead of today's report from the Federal Reserve on industrial production for September. It is the biggest economic indicator due out this week.
Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume came to 1.54 billion shares, below 1.86 billion on Tuesday.
The Russell 2000 index, the barometer of smaller-company stocks, fell 9.67, or 2.7 percent, to 350.85.
Overseas, Japan's Nikkei stock average finished yesterday up 0.5 percent. In Europe, France's CAC-40 declined 0.6 percent, Britain's FTSE 100 fell 1.8 percent and Germany's DAX index lost 1.3 percent.


Copyright © 2018 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