DOW closes below 10,000 for first time since April
Thursday, August 30th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ The Dow Jones industrials closed below 10,000 for the first time in more than four months Thursday after the latest installment of bad economic and corporate news _ a report of weak consumer spending in July and a revenue warning from Sun Microsystems.
The plunge, which marked the fourth straight decline for the market, came a day after news that the second-quarter gross domestic product was at its weakest level in eight years. Analysts said investors, already disheartened by the market's previous selloffs, are refusing to buy when the prospects for a recovery are so bleak.
``We've broken through some important psychological levels on the Dow by going below 10,000, and tech stocks are getting whacked,'' said Bryan Piskorowski, market commentator at Prudential Securities. ``There's a lot of feeling of doom and gloom out there, and the rank-and-file investor is on the sidelines waiting it out.''
The Dow closed down 171.32 at 9,919.58, a 1.7 percent loss, after falling as much as 221 points, according to preliminary calculations. The blue chip index has fallen 503 points or 4.8 percent this week. It last closed below 10,000 on April 9, when the index measured 9,845.15.
Broader stock indicators also slid, a reflection of widespread selling in technology stocks. The Nasdaq composite index dropped 51.49 to 1,791.68, its lowest close since 1,745.71 on April 9, while the Standard & Poor's 500 index lost 19.53 to 1,129.03.
The Nasdaq has fallen 125 points or 6.5 percent since the week started; the S&P has lost nearly 56 points or 4.7 percent during the same time.
Once again, discouraging economic data was the catalyst for a market selloff. The Commerce Department said consumer spending rose just 0.1 percent during July, an unexpectedly weak showing given that Americans began receiving tax rebate checks last month. A day earlier, the government had reported that the gross domestic product rose at an annual rate of only 0.2 percent during the second quarter _ the weakest showing since the first quarter of 1993.
The market responded with widespread selling. Technology issues were hit particularly hard.
Sun Microsystems fell $2.36 to $11.07, a more than 17 percent loss, after announcing late Wednesday it probably will lose money this quarter because of soft demand for its products in Europe and Japan. Advanced Micro Devices slipped 91 cents to $13.29 after it warned Wednesday afternoon of disappointing revenues.
``There's a complete absence of buyers in the market, so anyone who wants to sell is selling into a vacuum, and it's just not pretty,'' said Charles G. Crane, strategist at Victory SBSF Capital Management.
However, he said, ``The vehemence of the selling is a bit surprising.''
Other tech losers included Dow components Intel, down 97 cents at $27.13, and Microsoft, which dropped $3.31 to $56.94 after confirming that European regulators had widened an antitrust investigation against it.
The declines were the latest losses in a market that has struggled to rally sustainably since spring. All three indexes are now well below where they started the year, although not at their 2001 lows. The Dow is down 8 percent and the Nasdaq off more than 27 percent, while the S&P has lost more than 14 percent.
Analysts blamed the market's dismal performance on investors' growing doubts about when a business recovery will finally occur. With corporate earnings and forecasts continuing to be weak and mixed economic data, stock prices are likely to remain low for a while.
That pessimism further thwarted any positive reaction to news of the second interest rate cut of the year in Europe, a move expected to help U.S. companies that do business overseas. The U.S. government has already reduced interest rates seven times this year, but so far the cuts have failed to stimulate economic growth.
Declining issues led advancers more than 2 to 1 on the New York Stock Exchange, where volume came to 1.15 billion shares, up from 962.81 million Wednesday.
The Russell 2000 index was off 5.28 at 468.06.