US stocks fall sharply
A stronger-than-anticipated economic report today failed to impress investors, who instead retreated into the now-familiar pattern of unloading technology stocks as they worried about the timing of a recovery.
The Nasdaq composite index tumbled to its lowest level in two months on concerns that Wall Street’s advance last month might have been too much, too soon. Although economic data appears to be more positive, many businesses have yet to forecast a turnaround. Occasional bursts of bargain hunting have helped support the market, but there has been no catalyst for any broad movement.
The Dow Jones industrial average closed down 58.05, or 0.6%, at 9,713.80, despite an earlier advance of 70.
The technology-focused Nasdaq fared even worse as its morning gains deteriorated. It lost 47.79, or 2.5%, to 1,882.55 - its lowest close since November 21, when the index finished at 1.875.05.
The Standard & Poor’s 500 index dropped 8.27, or 0.7%, to 1,119.31.
The selloff came despite a report from the Conference Board that its Index of Leading Economic indicators, a key forecasting gauge, rose a strong 1.2% in December, the third consecutive monthly gain and a possible signal that the economy could be nearing a rebound.
The December gain was the largest since February 1996 and followed a revised increase of 0.8% in November and 0.1% in October.
The market has fluctuated much of this year, after a strong advance during the last quarter of 2001 in a rebound from the post-terror attack selloff. In recent weeks, mixed forecasts from tech bellwethers including IBM and Intel intensified concerns that a recovery might be delayed and that the market might have risen too much, too quickly in its eagerness for a turnaround.
The Dow and Nasdaq have now each fallen more than 3% since the beginning of the year. The S&P is down 2.5%.
Earnings were again the focus of trading today, with Wall Street rewarding strong performances.
Amazon.com rose dlrs 2.52 to dlrs 12.68 after reporting its first net profit yet. The figure beat its own forecasts and Wall Street’s expectations for the online retailer’s fiscal fourth quarter.
Investors also bid pharmaceutical giant Merck up dlrs 1.29 to dlrs 59.29 on results that met previously lowered expectations and included a 5.5 percent increase in fourth-quarter profit.
The selling failed to ignite broader buying, however, particularly in the beleaguered tech sector. Semiconductor stocks fell back on worries about weakness in wireless communications. Texas Instruments slipped dlrs 1.65 to dlrs 25.89, while Intel lost dlrs 1.54 to dlrs 31.94.
Nokia, the world’s largest cell phone maker, fell dlrs 1.35 to dlrs 21.15.
Declining issues led advancers nearly 4 to 3 on the New York Stock Exchange. Volume came to 1.30 billion shares, compared with 1.33 billion shares on Friday. US markets were closed on Monday for the Martin Luther King Jun holiday.
The Russell 2000 index of smaller companies lost 4.93 to 469.44.
