Dow's dive pared by late rally


The stock market rallied in the last 75 minutes of trading yesterday on news that the Pentagon was sending combat aircraft and support teams to the Persian Gulf. But stocks still fell, jolted by a raft of bad economic news.

In a volatile day of trading, the Dow Jones industrial average lost 144.27 points, or 1.62 percent, to close at 8,759.13.

The Dow had dropped 423 points to a low of 8,480.35 at 2:45 p.m., but rallied after the Pentagon announced that it was sending 100 planes to the gulf in response to last week's terrorist attacks. By the 4 p.m. market close, the Dow had recovered nearly 300 points.

"That was the catalyst," said Ken Pasternak, of Knight Trading Group in Jersey City, N.J. "That certainly pushed it over the edge."

The Nasdaq composite index, which is heavily weighted with technology companies, had been down more than 109 points, but ended the day down 27.28 points, or 1.75 percent, at 1,527.80.

The Standard & Poor's 500 stock index had fallen to 984.62 earlier, but closed at 1,016.10, down 16.64 points, or 1.61 percent.

Yesterday's decline followed the huge drop Monday, when the Dow plunged a record 684.81 points, or 7.13 percent, after opening for the first time since the terrorist attacks.

The Dow has lost 8.8 percent this week, already the biggest weekly loss since the crash of 1987. The S&P; 500 has shed 7 percent, and the Nasdaq has fallen 9.9 percent.

Elsewhere on the broad market yesterday, the Russell 2000 index slumped 8.46 to 403.20, and the Wilshire 5000 total market index skidded 158.55 to 9,357.76.

The Sun-Bloomberg index of the top stocks in Maryland fell 2.38 to 179.02.

Declining issues led advancers by more than 3 to 1 on the New York Stock Exchange. Consolidated volume came to 2.50 billion shares, compared with nearly 2.0 billion Tuesday.

Yesterday's pyrotechnics began almost immediately after the market's 9:30 a.m. open as investors began digesting a barrage of negative news.

In addition, investors who wanted to sell earlier in the week - but held off so they wouldn't spook the market - began unloading shares yesterday, said Michael Clark, head of global equity trading at Credit Suisse First Boston in New York.

They were "forced to do naturally what they would have done anyway," Clark said.

Pasternak said investors started buying stocks about the time of the Pentagon's announcement.

"People want to buy stocks, but they want to see some kind of catalyst," he said.

No panic observed

Despite the volatility, most investors didn't panic and sell, said Clark, who spent much of the day talking with clients.

"I don't think there is a sense of panic anywhere," Clark said. "People have a pretty steady ... view of the future."

Morry A. Zolet, senior vice president of investments at Salomon Smith Barney in Lutherville, said he has been fielding calls from investors.

"The calls that I am getting have been unbelievable," Zolet said. "It is, 'What do we buy?' Not, 'What should we sell?'"

Zolet likes banks, brokerage houses and consumer companies such as Kellogg Co., Procter & Gamble Co. and badly battered General Electric Co.

"When you see tremendous companies just getting whacked ... I think this is the time to stay in the game," Zolet said.

Indeed, the market's decline has been dramatic since it reached highs in March 2000. The S&P; 500, the index to which that most mutual fund managers and money managers peg their performance, is down 35 percent in the last 18 months.

"I have got to go back a long way to find a period that looks that ugly," said Will Braman, chief investment officer at Boston-based John Hancock Funds Inc. "The magnitude and the duration ... that is pretty unusual. On the other hand, these are fairly unusual circumstances."

By the end of yesterday's session, Boeing Co. was down 53 cents, or 1.6 percent, at $32.61. The airplane maker said late Tuesday that it would lay off 30,000 workers and that its deliveries of airplanes would fall this year.

Charles Schwab Corp., the country's largest discount broker, said it would miss profit estimates in the quarter, and its shares fell 56 cents to $9.45.

Other brokers also declined. Merrill Lynch & Co. fell $1.31 to $38.50; Lehman Brothers Holdings Inc. slid $1.06 to $51.33; and Ameritrade Holding Corp. lost 42 cents to $4.05.

Schwab has fallen 20 percent since trading resumed, Merrill 18 percent, Lehman 17 percent and Ameritrade 21 percent.

Eastman Kodak Co. also said its profit would come in lower than expected, and its shares slid $2.22, nearly 5.6 percent, to $37.61.

General Electric, the world's largest company, lost $1.35 to $32.50 and is down 17 percent this week. United Technologies Corp., whose Pratt & Whitney airplane engines compete with GE, fell $1.42 to $47.65.

Exxon Mobil Corp. lost $1.07 to $38.41; Royal Dutch/Shell Group's U.S. shares fell $2.63 to $48.05.

Tech giants decline

Among technology stocks, Intel Corp. dropped $1.19 to $22.28; Microsoft Corp. fell 45 cents to $53.87; and Dell Computer Corp. lost 71 cents to $19.08.

Pfizer Inc. fell 78 cents to $37.02; Johnson & Johnson lost 96 cents to $53.54; and Eli Lilly & Co. slid $2.46 to $75.50.

Phone companies were among the biggest gainers in the S&P; 500 yesterday. Verizon Communications Inc. rose $2.20 to $53.90, and Qwest Communications International Inc. gained 50 cents to $20.15.

AT&T; Wireless Services Inc. rose $1.02 to $15, and Nextel Communications Inc. rose 59 cents to $9.90.

Adobe Systems Inc. fell $4 to $26.10. The graphic-design software maker reduced its fourth-quarter revenue forecast to reflect declining sales in Japan and reported a decline in its fiscal third-quarter profit as sales fell.

ImClone Systems Inc., which is developing cancer medicines, jumped $6.59 to $56.60 after The Wall Street Journal reported that Bristol-Myers Squibb Co. is offering to buy a 20 percent stake in the company for $70 a share.

Overseas, Japan's Nikkei stock average rose 2.7 percent; Germany's DAX index lost 3.7 percent; Britain's FTSE 100 dropped 2.6 percent; and France's CAC-40 fell 2.0 percent.

The Associated Press and Bloomberg News contributed to this article.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad