- NEW YORK (Reuters)
- Stocks closed at their lowest levels in about two weeks on Wednesday
as a bleak outlook from Nortel Networks Corp. and a slew of downbeat analyst
comments eroded hopes for a swift upturn in corporate profits.
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- Technology shares have been under pressure in recent
sessions as investors question whether corporate spending on technology
products and services will perk back up. The market also moved lower as
Wall Street analysts cut earnings estimates for companies ranging from
brokerages to technology heavyweights.
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- "Everybody would love to have a reason to go pounding
back in (to technology), making the argument these things are down so much,"
said Donna Van Vlack, head of trading at Brandywine Asset Management. "But
you still have to rationalize the fact that it's going to take a long time
to cure the ills, heal the damage and deal with excess capacity issues."
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- Many investors were also taking the opportunity to cash
out after a rapid-fire rally that lifted the broad Standard & Poor's
500 index more than 20 percent from 5-year lows hit in mid-July to its
recent peak last week.
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- All three major market gauges closed at their lowest
levels since Aug. 13, with tech shares leading the way down. The tech-laced
Nasdaq Composite dropped 33.4 points, or 2.48 percent, to 1,314.38, according
to the latest available figures. The blue-chip Dow Jones industrial average
fell 130.32 points, or 1.48 percent, to 8,694.09 and the S&P 500 lost
16.95 points, or 1.81 percent, to 917.87.
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- Investors were anxious to put money to work but are now
on their guard, waiting for clear signs a rebound in the economy and corporate
profits is on its way, said Jack Schwetje, senior equities trader at Deutsche
Bank Securities. "There's no real bet that things continue to go up."
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- Trading volumes were thin, with much of Wall Street on
vacation ahead of Monday's Labor Day holiday. About 1.3 billion shares
traded hands on Nasdaq in one of the exchange's dullest days of the year,
and 1.1 billion were traded on the New York Stock Exchange.
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- Battered Canadian telecommunications equipment giant
Nortel, cut its revenue forecast and said it would trim another 7,000 jobs.
Nortel fell 19 cents to $1.04, down 15 percent. Rival Lucent Technologies
fell 20 cents, or 11 percent, to $1.69, and France's Alcatel lost 19 cents
to $5.34.
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- Shares of Sun Microsystems, among Nasdaq's most actively
traded stocks, fell 28 cents, or nearly 7 percent, to $3.96. Goldman Sachs
said Sun was unlikely to meet estimates, given the current weakness in
information technology spending.
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- Brokerage stocks took a hit after Prudential Securities
cut its earnings estimates for Goldman Sachs Group and Lehman Brothers
Holdings Inc., citing the weak stock market and anemic filings for new
stock offerings.
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- Goldman fell $2.02 to $77.08, and Lehman fell $2.02 to
$56.22. The American Stock Exchange's securities broker-dealer index fell
more than 3 percent.
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- On an upbeat note, Qwest Communications International
Inc. surged 9 percent, up 24 cents at $3.01, amid rumors the telephone
and data services company was close to a deal with its banks to amend the
terms of a $3.39 billion credit agreement, analysts said. The company declined
to comment.
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- Another bright spot was InterMune Inc., which jumped
26 percent, or $4.66, to $22.66 after results from a late-stage trial of
its drug for a fatal lung disease showed it helped prolong life in some
patients.
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- No. 2 computer maker Hewlett-Packard Co. staged a late
turnaround to rise 6 cents to $14.27. HP late Tuesday reported a profit
excluding one-time costs, but had a net loss of $2 billion in its first
quarter after acquiring Compaq Computer. The results were largely in line
with expectations.
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- Bear Stearns and UBS Warburg cut their estimates for
HP's earnings, citing the problems dogging the PC industry.
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- Chip stocks were hit again by bad news after being slammed
on Tuesday by a lackluster outlook from Intel Corp. that dampened hopes
for a rebound in the sector. Intel, which was the most actively traded
stock on Nasdaq, fell 34 cents, or 2 percent, to $16.84.
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- Semtech Corp. slumped nearly 26 percent after the semiconductor
maker forecast third-quarter sales would fall due to weak consumer demand.
It fell $4.87 to $14.05.
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- Specialty chip maker TriQuint Semiconductor Inc. lost
33 cents to $5.45 after saying it cut its work force by 7 percent. Chip
maker Cirrus Logic Inc. said it still expects to report a loss and has
a conservative outlook for the Christmas season due to slowing consumer
confidence. It fell 55 cents, or 12 percent, to $4.07.
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- The Philadelphia Stock Exchange's semiconductor index,
which has tumbled about 16 percent in the past week, fell 4 percent.
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- Fiber optics firm Ciena Corp. shed 59 cents, or 12 percent,
to $4.17, and JDS Uniphase, the world's largest supplier of fiber-optic
components and modules that boost speed and capacity of fiber-optic networks,
fell 20 cents to $2.70. Corning Inc. slumped 34 cents, or 15 percent, to
$1.95.
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- Web gear maker Cisco Systems Inc. fell 30 cents to $13.72
and was among Nasdaq's most actively traded issues.
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- Among Dow stocks, Walt Disney Co. tumbled 60 cents to
$15.40. Fitch Ratings said the company is unlikely to meaningfully improve
its operations in 2003 as it struggles to reverse sagging theme park attendance
and TV ratings.
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- Alcoa Inc. fell $1.63, or 6 percent, to $25.07. Lehman
Brothers cut its 2002 earnings forecasts, citing concerns that aluminum
supply from China will be worse than expected.
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- Oil shares were also weak, sagging in line with crude
oil futures following a fresh signal from a senior OPEC delegate that the
cartel has set its sights on increasing crude output next month. Oil giant
and Dow component Exxon Mobil dropped $1.28 to $35.62. The American Stock
Exchange's oil index fell more than 2 percent.
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