Wall Street succumbs to selling
Wall Street succumbed to more selling today, extending Friday’s selloff in a volatile session that saw the Dow Jones industrials drop more than 300 points, rebound and then close down more than 230.
Analysts said the sharp swings reflected investors’ uncertainty after nine weeks of declines, including Friday’s 390-point plunge in the Dow. Mixed earnings reports affected specific stocks, but failed to give the market a lift.
The Dow closed down 234.82, or 2.9%, at 7,784.44, its third straight triple-digit finish and its lowest close since it reached 7,731.90on October 8, 1998. It was also the average’s first close below 8,000 since October 14, 1998, when it finished at 7,968.80.
The Dow has lost 625.05 points in the last two sessions.
Broader stock indicators also retreated. The Nasdaq composite index was down 36.60, or 2.8%, at 1,282.55, and the broader Standard & Poor’s 500 index was off 27.92, or 3.3%, at 819.83.
The Nasdaq last closed lower on May 1, 1997 when it was at 1,270.50. The last time the S&P closed lower was May 7, 1997 when it stood at 815.62.
The volatility came a day after WorldCom filed for bankruptcy protection, a move that had been widely expected following the telecommunications company’s disclosure nearly a month ago of deceptive accounting practices.
The stock rose 5 cents to 14 cents after WorldCom’s chief executive said he was optimistic the company would emerge from court protection within 12 months.
Although the WorldCom announcement was significant, analysts said it was not the primary driver for Wall Street’s retreat.
Rather, they said, investors, fed up with corporate ethics and accounting scandals, are staying away from the market or even pulling their money out and shifting into investments perceived as less risky, such as real estate or bonds.
Still, there were still some losses related to the news, particularly among WorldCom’s creditors. JP Morgan Chase fell dlrs 1.58, or 6%, to dlrs 24.52, while Citigroup dropped dlrs 3.96, or 11%, to dlrs 32.04.
Citigroup was also hurt by a Wall Street Journal report that the National Association of Securities Dealers was preparing a case against its Salomon Smith Barney unit and research analyst Jack Grubman for alleged security rules violations.
Other stocks to record steep declines included Microsoft, which tumbled dlrs 3.27, or 6.6%, to dlrs 46.29, and IBM, which slid dlrs 3.50, or 4.9%, to dlrs 68.50.
Energy issues fell, too. ExxonMobil slid dlrs 2.13, or 6.6%, to dlrs 30.27, while Williams Cos fell 61%, down dlrs 3.15 to dlrs 2.01, on news that the company expected a significant quarterly loss and planned to slash its dividend.
The few companies that did manage gains indicated or had news suggesting that higher stock prices might be ahead.
Procter & Gamble advanced dlrs 3.37 to dlrs 77.83 after the personal care products company said it is stepping up its stock buyback programme, but remained confident about its business. UBS
Warburg also upgraded the stock from "buy" to "strong buy".
Also today, President George Bush again expressed confidence that the economy was improving, and said legislation moving through Congress should help increase investors’ faith in the stocks.
Stocks have fallen steadily since May 17, the last time the three major indexes posted a weekly advance.
Declining issues led advancers 4 to 1 on the New York Stock Exchange. Volume totalled 2.14 billion shares, compared with 2.63 billion.
The Russell 2000 index of smaller companies fell 6.55 to 379.65.
