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- Woman battered after smashing boyfriend's meth pipe against wall, police say (4/25/17)1
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- State Supreme Court rules against congressman's mother in dog-kennel defamation case (4/27/17)1
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Stocks fall on profit warnings, layoffs, drop in retail sales
AP Business WriterNEW YORK (AP) -- Profit warnings from Ciena and Lucent Technologies, along with news of more layoffs and deteriorating retail sales, unnerved Wall Street Thursday and prompted heavy selling.
The spate of negative news indicated that parts of the economy are likely to remain weak early in 2002, a disappointment to investors who have been buying stocks for weeks on increasing confidence of an impending economic recovery.
"People want to see some less negative profit numbers, as well as the first sign that profits are going to return to positive in the foreseeable future," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.
The Dow Jones industrial average closed down 128.36, or 1.3 percent, at 9,766.45, according to preliminary calculations.
The broader market, with a greater percentage of technology stocks than the Dow, suffered the most from the profit warnings. The Nasdaq composite index dropped 64.85, or 3.2 percent, to 1,946.53 and the Standard & Poor's 500 index fell 17.69, or 1.6 percent, to 1,119.38.
But analysts added that Thursday's batch of discouraging reports don't mean the economy isn't going to improve, and that investors should remember that a recovery takes time.
"What individual investors and portfolio managers alike have to get used to is that this is a transitional market," said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray. "Companies are still in the clean-up process."
The market's losses were widespread Thursday with the sharpest declines coming from sectors that indicated business will remain tough into 2002.
Technology suffered from a first-quarter earnings warning from Ciena, along with an announcement of 1,700 job cuts by Applied Materials on Wednesday after the market closed. On Thursday, networker Ciena slid almost 17 percent, down $3.03 at $14.94, and chip equipment maker Applied Materials fell $3.79 to $41.08.
Other networking and semiconductor stocks fell. Broadcom dropped $3.48 to 42.47, and PMC-Sierra sank 16.5 percent, down $4.63 at $23.39.
Telecommunications stocks declined on a first-quarter profit warning from Lucent, which plunged nearly 16 percent, down $1.21 at $6.52. Competitor Motorola stumbled 77 cents to $16.15.
Among blue chips, investors punished retailers following a Commerce Department report that retail sales plunged 3.7 percent in November. Best Buy fell $1.15 to $66.05, and Wal-Mart declined 97 cents to $53.36.
Aetna slipped 30 cents to $30.74 after the health care provider announced it was cutting 6,000 jobs, or 16 percent of its work force.
But there were some winners. United Technologies rose $1.15 to $60.65 and was the strongest Dow component after it raised its 2002 earnings projections.
There also was some positive economic news, but it failed to trigger much buying. The Labor Department reported that the number of Americans filing first-time claims for unemployment benefits fell by 86,000 last week, the biggest weekly decline in nine years.
A separate report showed wholesale prices fell for a second straight month, dropping 0.6 percent in November after a bigger 1.6 percent plunge in October.
Thursday's selling aside, analysts also noted that the overall market has grown more upbeat with the market indexes rising substantially from the yearly lows they hit on Sept. 21, following the first week of trading after the Sept. 11 terror attacks. The Dow is 18.6 percent above its low of 8,235.81. The Nasdaq is up 36.8 percent from its low; the S&P, up 15.9 percent.
Declining issues outnumbered advancers 2 to 1 Thursday on the New York Stock Exchange. Volume came to 1.40 billion shares, compared with the 1.35 billion shares on Wednesday.
The Russell 2000 index, the barometer of smaller company stocks, fell 6.64, or 1.4 percent, to 468.67.
Overseas, Japan's Nikkei stock average closed down 3.4 percent. In Europe, Britain's FT-SE 100 finished down 0.9 percent, France's CAC-40 fell 2.2 percent and Germany's DAX index declined 1.9 percent.
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