Advertisement
YOU ARE HERE: LAT HomeCollections

Markets

Weakness in Tech Casts Pall on Market

Wall St.: Nasdaq drops 3.3%. Investors are further discouraged without an economic stimulus package.

December 21, 2001|From Times Wire Services

Technology shares led a stock market retreat Thursday after networking heavyweight Juniper Networks rattled Wall Street with an earnings warning.

"We are in prime earnings-warnings season," said Alan Ruskin, research director at 4Cast Ltd., an economic research firm in New York. "The market wants to be bullish, but it's getting beaten down by earnings [fears]."

Analysts are forecasting a 20% drop in earnings of the Standard & Poor's 500 companies in the fourth quarter, but that number could widen to 22%, making it the worst quarterly earnings drop of the year, according to market research firm Thomson Financial/First Call.

Investor enthusiasm also was damped when Congress adjourned without passing legislation to boost the U.S. economy with tax cuts and aid for the unemployed.

The technology-laden Nasdaq composite index fell 64.35 points, or 3.3%, to 1,918.54. The blue-chip Dow Jones industrial average fell 85.31 points, or 0.9%, to 9,985.18, while the broader Standard & Poor's 500 index dropped 9.63 points, or 0.8%, to 1,139.93.

Losers outnumbered winners 2 to 1 on Nasdaq and 4 to 3 on the New York Stock Exchange in active trading.

The latest economic reports gave some hope that a recovery could be close at hand, but offered scant comfort to investors. Claims for first-time jobless benefits fell unexpectedly to a seasonally adjusted 384,000 in the week ended Dec. 15 from 395,000 in the previous week.

Meanwhile, a report by the Federal Reserve Bank of Philadelphia said manufacturing activity in the mid-Atlantic region rebounded sharply this month. The monthly index of business conditions posted its 13th straight month of contraction but showed signs of recovery.

Much of the weakness in technology issues was attributable to Juniper, which said fourth-quarter earnings would fall short of Wall Street forecasts by 50%. Juniper fell $4.08 to $18.85.

Also, contract electronics manufacturer Jabil Circuit said slow demand would continue to hurt earnings. Its fiscal first-quarter profit fell more than 80%, and its stock dropped $3.50 to $21.25.

Among Thursday's highlights:

* Semiconductor stocks continued to slide on worries about 2002. Intel dropped $1.07 to $31.98, PMC-Sierra slid $2.85 to $18.26 and Texas Instruments fell $1.40 to $26.50.

* Stocks of financial services firms slipped after several Wall Street firms reported sharply lower profits because of declining investment banking fees. Bear Stearns fell 60 cents to $58.38, and Goldman Sachs lost $2.10 to $92.31. J.P. Morgan Chase fell $1.48 to $36.52 after it disclosed more loans to energy giant Enron, which filed for bankruptcy protection Dec. 2.

* Argentina's stock market rallied for a second day even as political instability and social unrest touched off fears that the country soon will default on its sizable debt. The benchmark Merval index jumped 17.5% after rising 7.6% on Wednesday.

* Microsoft slid $2.73 to $66.76. The biggest software company said its new Windows operating system for personal computers has a major flaw that could let hackers steal or destroy files or hard drives. Microsoft has released a program on its Web site to resolve the issue.

* Mirant and Dynegy fell after the power producers sold new stock, diluting the value of existing shares. Mirant lost $2.08 to $13.99. Dynegy slipped 13 cents to $23.85. Mirant also projected earnings for next year that fall short of analysts' estimates.

* The Japanese yen hit a new three-year low against the dollar, at 128.53 yen, on deepening worries about Japan's economy.

Advertisement
Los Angeles Times Articles
|
|
|