J. P. Morgan & Co. and Citigroup Inc. were among the Dow Jones industrial average's biggest losers after Merrill Lynch & Co.'s Judah Kraushaar said a slowing economy, prompted by six rate increases in the past year, will reduce bank profits. Retail stocks weighed on the Standard & Poor's 500 index.
The Nasdaq erased a gain of 1.6 percent and finished down 65.39, or 1.7 percent, at 3,756.37 after a sudden decline in stock-index futures. Traders at the Chicago Mercantile Exchange said Morgan Stanley Dean Witter & Co., trading for itself or its customers, contributed to the sell-off in the futures market. A Morgan Stanley spokeswoman said she could not immediately comment.
"You've got a lot of nervous fish in the sea right now, so you're going to have a lot of sudden swings," said David Briggs, head of stock trading at Federated Investors Inc. in Pittsburgh. "Until it becomes clear that the Fed is done raising rates, the market's going to be susceptible to high volatility."
The Dow industrials lost 79.73, or 0.7 percent, to 10,735.57. The S&P; 500 dropped 9.79, or 0.7 percent, to 1,457.84. Rising and falling stocks were about even on the New York Stock Exchange.
The Nasdaq composite slid 135 points from its high of the day to its low. Many speculators are sitting on big short-term gains after last week's record advance, and when they see that stocks are declining, they sell, Briggs said. The Nasdaq is not likely to return to its March high anytime soon, he said.
About 950 million shares changed hands on the Big Board, 8.5 percent below the three-month daily average.
Elsewhere on the broad market, the Russell 2000 index, a benchmark of small-cap stocks, lost 1.65 to 511.65; the Wilshire 5000 index slipped 104.81 to 13,573.99; the American Stock Exchange composite index advanced 7.61 to 928.18; the NYSE composite index dropped 2.16 to 653.00; and the S&P; 400 mid-cap index shed 2.45 to 494.09.
The Sun-Bloomberg Maryland index of the top 100 Maryland stocks gained 1.95 to 255.29, led by Human Genome Sciences Inc., up $8.50 to $122, and PE Corp.-Celera Genomics Group, up $8 to $105.
Big-name tech stocks slipped. Oracle Corp. fell $3.875 to $77.0625; Cisco Systems Inc. dropped $1.9375 to $61.3125; and Sun Microsystems Inc. shed $4.3125 to $83.875.
Intel Corp. fell $3 to $129.5625 after it said its new processor, code-named Timna, will be delayed until early next year. The chip was designed for use with Rambus Inc. memory technology. Rambus shares fell $12 to $202.
Among bank stocks moving lower were J. P. Morgan, off $3.75 to $133.375; Citigroup, down $1.625 to $64.8125; and Bank of America Corp., which lost $2.50 to $56.75.
Immunex Corp. rose $1.1094 to $32.1094. Chief Executive Officer Edward Fritzky said sales of Enbrel, the biotechnology company's only major product, exceeded $50 million last month.
Maxim Pharmaceuticals Inc., a maker of treatments for cancer and infectious diseases, rose $3.8125 to $49.9375 after it agreed to buy Cytovia Inc., a privately held company working on an experimental leukemia therapy.
Other biotechnology stocks to gain included Millennium Pharmaceuticals Inc., up $13.1875 to $119.50.
Comcast Corp. shares fell $1.9375 to $35.0625 after analysts Karim Zia and Dennis Leibowitz at Donaldson, Lufkin & Jenrette Inc. cut their rating on the industry to "market perform" from "outperform," pointing to heightened competition with direct-broadcast satellite and digital subscriber line services.
Circuit City Group dropped $12.625 to $39.50. The No. 2 U.S. consumer-electronics chain said its first-quarter profit margin will be lower than expected and that May sales at stores open at least a year were little changed.
Nordstrom Inc. fell $1.50 to $22.4375 after the upscale department store chain said May same-store sales fell 11 percent. Best Buy Co., the No. 1 U.S. consumer electronics chain, fell $5.25 to $66.75.
Changes in the S&P; indexes pushed some stocks higher. Starbucks Corp. gained $1.875 to $37.50. The coffee retailer is replacing Shared Medical Systems Corp. in the S&P; 500. Shared Medical is being acquired by Siemens AG.
Convergys Corp. rose 18.75 cents to $48.1875. The provider of services to wireless companies will replace Times Mirror Co. in the S&P; 500 on Monday. Times Mirror is being acquired by Tribune Co., already a member of the index.
Energy stocks surged after Merrill Lynch analysts said oil prices are likely to stay above $25 a barrel this year and above $23 in 2001 and 2002. Exxon Mobil Corp. rose $3.0625 to $82.375; Total Fina Elf was up $2.0313 to $78.50; Amerada Hess Corp. gained $2.50 to $65.75; and Texaco Inc. was up $3.375 to $58.