- NEW YORK (Reuters) - Stocks
sank after a seesaw session on Wednesday as gnawing worries over earnings
at giants like Dow Chemical Co. and Cisco Systems Inc. and the threat of
war eroded the previous day's fat rally.
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- "I don't think anybody has any conviction any more,"
said Charles White, president of Avatar Associates, which oversees about
$2 billion.
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- Dow Chemical fell 8.6 percent after the No. 2 U.S. chemical
company by market capitalization warned that it will miss expectations.
The grim call helped push chemicals leader DuPont Co. near the top of the
Dow's percentage loser list. Web gear giant Cisco Systems Inc. added to
earnings jitters after a sour research call helped spark an 8 percent slide
in its shares.
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- The selloff may have been hastened by an errant trade
executed 20 minutes before the close. The New York Stock Exchange said
Bear Stearns Cos. Inc. entered an erroneous order to sell $4 billion worth
of stock -- a clerical error that should have been entered as $4 million.
All but $622 million of the orders were canceled before execution.
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- The blue-chip Dow Jones industrial average fell 183.18
points, or 2.31 percent, to 7,755.61, according to the latest figures,
after rising more than 4.5 percent on Tuesday.
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- The broad Standard & Poor's 500 Index, which climbed
4 percent the day before, sank 20.00 points, or 2.36 percent, to 827.91.
The technology-laced Nasdaq Composite Index lost 26.42 points, or 2.18
percent, to 1,187.30, after a 3.5 percent gain on Tuesday.
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- Losers beat out winners by a ratio of 2 to 1 on the New
York Stock Exchange and Nasdaq. More than 1.66 billion shares changed hands
on the Big Board and more than 1.76 billion on Nasdaq in moderate trading.
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- Worries over weak earnings, the soft economy and the
threat of war are driving the market down, but bargain hunters are eyeing
stocks priced at multiyear lows. The market moved into positive ground
at midday after a selloff earlier. Stocks then slumped again as President
Bush warned that Iraq had limited time to comply with U.N. resolutions
and the use of force may be "unavoidable."
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- "The war fears ratcheted up a little bit more after
that," said Alfred Kugel, senior investment strategist at Stein Roe
Investment Counsel.
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- War fears also were fanned when Bush and leaders of the
U.S. House of Representatives closed ranks behind a resolution authorizing
use of military force against Iraq.
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- The market had kicked off the fourth quarter with a rally
on Tuesday after a deal between Iraq and the United Nations offered some
solace to a market troubled by the threat of war. But Wednesday's selloff
wiped out more than half of Tuesday's gains.
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- Traders say war is still a likelihood and companies are
still struggling to scrape out profits in a lackluster economy. On Monday,
the S&P and the Dow wrapped up their worst quarter since the crash
of 1987.
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- "The underlying fundamentals are still playing a
bearish role, with the issue of war with Iraq sort of pending," said
Tim Crimmins, a trader for Lord, Abbett & Co. "We know it's going
to happen, but the question is 'When?' Also, do corporate earnings turn
around? Does the economy turn around? These are the overall themes of the
market."
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- Cisco, the most active stock on the Nasdaq, slumped 89
cents to $10.05. Wall Street brokerage UBS Warburg cut Cisco's revenue
forecasts and its price target to $14 from $15.50.
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- UBS cited recent weakness in information technology spending,
a profit warning from rival Extreme Networks Inc. and softness in Japanese
and European markets. Extreme Networks tumbled 45 cents, or more than 11
percent, to $3.48.
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- Dow Chemical fell $2.55 to $27.25 after warning that
third-quarter earnings will miss expectations. Dow blamed higher raw material
costs, mainly in Europe. Its warning helped push DuPont down $2.32, or
more than 5 percent, to $37.31.
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- Discouraging comments from Oracle Corp. helped keep sentiment
sour. Chief executive Larry Ellison said he saw slow growth both in the
technology sector and the U.S. economy. Oracle fell 23 cents to $8.31.
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- Computer services giant Electronic Data Systems Corp.
lost $1.74, or more than 11 percent, to $13.35. The company said it is
cooperating with federal regulators in an informal inquiry related to its
recent surprise profit warning and other issues.
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- Schering-Plough Corp. surrendered $1.72, or more than
8 percent, to $18.08 and ranked as the second-most active on the Big Board.
Fund managers said the company was tumbling for a second day on concerns
Wall Street's third-quarter earnings expectations for the firm may be too
high.
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- Wall Street did get some good news from Dell Computer
Corp., which lifted its earnings and sales forecasts, sending its shares
up almost 3 percent, or 68 cents to $25.32.
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- Guidant Corp. sank $5.10, more than 15 percent, to $27.73.
A federal judge agreed to block Guidant's development of a drug-coated
stent, a ruling that effectively sent Guidant back to the drawing board
in its effort to bring the lucrative heart device to market.
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- Industry watchers had said a favorable ruling was critical
for Guidant to stay in the race with Johnson & Johnson and Boston Scientific
Corp. to develop the devices. Johnson & Johnson, a Dow stock, rose
$1.98 to $58.28, while Boston Scientific jumped $3.32 to $35.60.
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