Fear about profit growth sends Dow, Nasdaq plunging to triple-digit losses
Tuesday, April 3rd 2001, 12:00 am
By: News On 6
U.S. stocks got slammed Tuesday after a slew of earnings warnings brought fears to the forefront about how companies will perform in a slowing economy.
Another day, another 29-month low on the Nasdaq composite index, which shed more than 100 points. It has become an almost daily occurrence for the indicator to exceed its previous decline.
Meanwhile, the Dow Jones industrial average plunged nearly 300 points. All 30 issues on the Dow took a beating, with most falling more than $1.
"People don't want to lose any more money, and selling begets selling," said Peter Green, market analyst with Gerard Klauer Mattison & Co. "No one is giving any good guidance and it's a complete selling fest."
Technology stocks were dragged lower by software maker Ariba, which said it would post a loss instead of a profit for its fiscal second quarter.
The Nasdaq composite index fell 109.98, or more than 6 percent, to 1,672.99. The indicator is now at levels it hasn't seen in more than 29 months, and has lost two-thirds of its value from its March 10, 2000, high of 5,048.62.
But the selling wasn't confined to tech issues, as worries about growth spilled into the broader market. Just two weeks ago, the Dow briefly stepped into bear market territory â€“ defined as a 20 percent drop from a high.
"Whenever companies come out with warnings, it reminds investors about the perilous nature of the earnings environment at the moment," said Joseph Battipaglia, chief investment strategist at Gruntal & Co.
The Dow Jones industrial average dropped 292.22, or around 3 percent, to 9,485.71. The blue chip indicator is down 19 percent from its Jan. 14, 2000 high of 11,722. The Standard & Poor's 500 shed 39.43 to 1,106.44 and is down 27 percent from its March 23, 2000 high of 1,527.
It wasn't just the warnings plaguing sentiment. With the tax deadline just 13 days away, some investors also may be feeling the pain of having to ante up money for tax liabilities suffered in the face of last year's significant equity losses.
"People lost money last year and now they have to pay the tax bill -- 'They're saying I lost money and now I have to write a check.' They're not thinking about earnings or warnings," said Vince Farrell, chief investment officer with Spears Benzak Salomon & Farrell.
Market breadth was negative. On the New York Stock Exchange, decliners beat advancers 2,362 to 735 as more than 1.36 billion shares were traded. Losers outpaced winners on the Nasdaq 3,012 to 785 as more than 2.55 billion shares changed hands.