Major indexes record new lows again

Thursday, June 20, 2002

AP Business WriterNEW YORK (AP) -- Wall Street came the closest yet to its post-terrorist attack lows Thursday with a sharp selloff provoked by another round of warnings -- this time from Genzyme and Nokia. The Dow Jones industrials fell triple-digits for a second session, while the Nasdaq composite index and Standard & Poor's 500 fell to levels last seen in late September.

Even a slightly higher-than-expected increase in the Index of Leading Economic Indicators, a key indicator of economic activity, failed to inspire an advance. Analysts said the combination of mediocre earnings prospects and turmoil overseas is keeping investors away.

"There's no confidence among investors and it shows, because you get one up day and then you give it back again over the next couple," said Robert Froehlich, chief investment strategist for Deutsche Asset Management. "Two years ago, everywhere you looked there was a reason to invest. Today, everywhere you look there is a reason not to invest."

The Dow Jones industrial average closed down 129.80, or 1.4 percent, at 9,431.77, according to preliminary calculations, its lowest close since Nov. 2, when the average stood at 9,323.54. It was the average's fourth triple-digit loss in eight sessions. The Dow has fallen 274.35 points over the last two days, wiping out a rally earlier in the week.

Broader stock measures also retreated. The Nasdaq composite index lost 32.08, or 2.1 percent, to 1,464.75. The index last finished lower on Sept. 27, when it was 1,460.71.

The Standard & Poor's 500 index dropped 13.70, or 1.3 percent, to 1,006.29. The index last closed lower on Sept. 24, at 1,003.45.

The selloff brought all three indicators to new lows for 2002 and even closer to the lows that followed the Sept. 11 attacks on the World Trade Center and the Pentagon. The Nasdaq is just 2.9 percent and the S&P 4.2 percent from their respective Sept. 21 lows, while the Dow has 14.5 percent to go.

Genzyme tumbled $6.17, or 23.8 percent, to $19.70 on news that the medical products company reduced its quarterly and full year estimates.

But Nokia was slightly higher, gaining 3 cents to $12.43, although the mobile phone company said sales for the rest of 2002 will be lower than expected because of uncertain market conditions.

Outside the technology sector, Metro-Goldwyn-Mayer fell 57 cents to $13.18 after the entertainment company said its second-quarter and full-year loss will be wider than expected.

And General Motors fell $2.59 to $53.75, while Ford dropped 75 cents to $15.73, after Morgan Stanley downgraded the stocks, citing concerns about consumer demand.

The losses came even as the Conference Board reported a 0.4 percent increase in its Index of Leading Economic Indicators, recovering from a revised decline of 0.3 percent in April. Analysts had expected a 0.2 percent gain.

There also was some encouraging news about the job market. The Labor Department said the number of Americans filing new claims for unemployment insurance last week fell by 2,000 to 393,000.

Still, the market failed to get excited -- a disappointing but not surprising turn given how poorly it has been performing. Stocks have fallen for weeks, with occasional rallies that prove to be unsustainable. Analysts say the recent spate of warnings from companies ranging from Intel to Monsanto has increased anxiety that the recovery won't be enough to boost lagging stock prices. The ongoing violence in the Middle East and concern about nuclear war erupting between Pakistan and India have added to the uncertainty. On Thursday, four Israelis were reported killed by Palestinians.

As a result, many investors are staying away, rather than risk further losses.

"Bulls just can't win," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. "What seems to be a good news story, like these leading economic indicators, is pretty much ignored because earnings and revenue have pretty much disappeared for the second half of the year. It's just a very poor environment for investing."

Wall Street is also concerned that the weakening U.S. dollar will impede the market's recovery. The approach Friday of what is known as a triple-witching session, the quarterly expiration of index futures and index and stock options, was another factor.

Declining issues led advancers 4 to 3 on the New York Stock Exchange. Volume came to 1.35 billion shares, compared with 1.27 billion shares Wednesday.

The Russell 2000 index fell 2.67 to 460.25.

Overseas, Japan's Nikkei stock average rose 1.3 percent. In Europe, Germany's DAX index lost 2.5 percent, Britain's FTSE 100 dropped 1.6 percent, and France's CAC-40 fell 2.6 percent.

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