- NEW YORK, Jan 24 (Reuters)
- Stocks tumbled to their lowest levels since October on Friday as the
specter of a U.S. war against Iraq loomed over a market already spooked
by the outlook for corporate profits during the rush of reporting season.
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- The blue-chip Dow, which lost a whopping 238 points,
and the broad Standard & Poor's 500 index slammed to three-month lows,
while the tech-packed Nasdaq smacked its lowest level this month. Wall
Street has endured losses in five of the past six sessions.
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- "It's brutal, completely brutal," said Anthony
Iuliano, head equity trader for Glenmede Trust Co..
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- The Dow Jones Industrial average .DJI fell 238.46 points,
or 2.85 percent, to 8,131.01, according to the latest available numbers.
The Dow hit its lowest level since Oct. 17. All 30 blue-chip components
ticked lower.
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- The Standard & Poor's 500 index .SPX slumped 25.94
points, or 2.92 percent, to 861.40, also slamming to its lowest point since
Oct. 17. The Nasdaq Composite Index .IXIC dropped 46.14 points, or 3.32
percent, to 1,342.13.
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- Investors are on tenterhooks ahead of two events early
next week that could determine whether there is war.
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- U.N. inspectors, who have spent two months hunting for
evidence of banned weapons of mass destruction in Iraq, will present their
findings on Monday, and President George W. Bush will make his case against
Iraq in his State of the Union address on Tuesday.
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- War worries plagued Wall Street and other markets around
the world as U.S. forces massed in the Gulf and a rift widened between
Washington and key allies on whether Iraq should be disarmed by force.
Investors fled to safe-haven bonds and the dollar fell hard, while gold
surged to six-year highs and world oil prices spiked.
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- "The market is in desperate need of a resolution
of the conflict if it is going to have any chance of mounting a recovery
this year," said Harry Michas, stock index futures trader at manmarketmonitor.com.
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- This week and the next mark the busiest weeks of the
fourth-quarter earnings season, and many companies are failing to prove
profits are on the mend.
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- CMS Energy Corp. CMS.N tanked almost 29 percent and American
Electric Power Co. Inc. AEP.N fell 4.6 percent after the utility companies
offered bleak outlooks. American International Group Inc. AIG.N sank 8
percent and Allstate Corp. ALL.N fell 3.6 percent after Morgan Stanley
downgraded insurers, blaming in part a "continued weak economy."
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- "Companies are not giving a tremendous amount of
visibility for 2003, and considering Iraq still looms, people are getting
a little skittish and are taking some money off the table," said Jack
Francis, senior Nasdaq trader at UBS Warburg.
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- For the week, the Dow tumbled 5.3 percent, the S&P
500 fell 4.5 percent and the Nasdaq surrendered 2.5 percent. All three
gauges sank for the second straight week.
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- The Dow and the S&P 500 are in negative ground for
the year despite an early January rally. The Nasdaq is up just 0.5 percent
so far in January.
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- Declining stocks trounced advancers by a ratio of about
3 to 1 on the New York Stock Exchange and Nasdaq. More than 1.53 billion
shares changed hands on the Big Board and more than 1.57 billion on Nasdaq
in moderate trading.
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- INSURERS, UTILITIES HIT
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- Corning Inc. GLW.N , the world's largest maker of fiber-optic
cable, tumbled 36 cents, or 8 percent, to $4 and whacked telecommunications
stocks. Corning posted a net loss and repeated its view that the telecoms
sector will not rebound until late next year. The American Stock Exchange's
North American Telecom Index .XTC fell 2.95 percent, adding to Thursday's
steep decline.
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- Communications chip maker Broadcom Corp. BRCM.O sank
$2.50, or 14 percent, to $15.11. Its chief executive announced his resignation
and the company posted a fourth-quarter loss approaching $2 billion, including
a massive charge. The Philadelphia Stock Exchange's semiconductor index
.SOXX fell 4.97 percent.
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- Utility company CMS Energy tumbled $2.47 to $6.07. The
company said it would report a large loss for 2002 because of asset write-downs
and said it has suspended its dividend to retain cash.
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- American Electric Power fell $1.24 to $25.65. The company
said it has cut 1,300 jobs and will lower capital spending, sell some assets
and likely pare its dividend in order to reduce costs and strengthen its
balance sheet.
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- Insurer AIG skidded $4.89 to $56.04 after Morgan Stanley
cut its rating on the insurance-property & casualty sector, in part
citing a "continued weak economy."
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- BRIGHT SPOTS
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- The bleak session did have pockets of strength.
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- Canadian telecom gear maker Nortel Networks Corp. NT.TO
NT.N rallied 18 cents, or 7.5 percent, to $2.58 and ranked as the most
active on the Big Board. The company posted its 12th straight quarterly
loss on sliding sales of its telecommunications gear but said it would
return to profit in the second quarter of 2003.
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- Internet retailer Amazon.com Inc. AMZN.O rose 32 cents
to $22.11. The Internet retailer reported its second-ever quarterly net
profit and raised its outlook, forecasting a gain of at least 15 percent
in 2003 sales.
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- Western Digital Corp. WDC.N was another bright spot,
climbing 75 cents, or 10 percent, to $8.15. The company said its fiscal
third-quarter earnings and revenue will outpace Wall Street analysts' projections,
boosted by demand for its hard disk drives. (With additional reporting
by Doris Frankel)
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