Friday, Jul 12, 2002
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Another downgrade of General Motors again hurt blue chips. But even such good news as improved outlooks at Wal-Mart and Yahoo! failed to encourage investors to do much buying.
Thursday's downturn followed a dismal three-session losing streak on Wall Street. Wednesday's selloff saw the Dow industrials slide more than 280 points, their biggest one-day loss since September, and drop below 9,000 for the first time since October.
In the first hour of trading, the Dow Jones industrial average was down 15.09 points, or 0.2 per cent, at 8,798.41, after falling 566 over the previous three sessions. On Wednesday, the blue chips fell 282, their biggest one-day loss since September, to close below 9,000 for the first time since October.
The broader market was mixed. The Nasdaq composite index rose 8.29 points, or 0.6 per cent, to 1,354.30, having closed on Wednesday at a low not seen since May 1997. The Standard & Poor's 500 index slipped 0.53 to 919.94, having dropped on Wednesday to a closing low not seen since December 1997.
Yahoo fell 40 cents to $11.79 despite on Wednesday having reported its first quarterly profit since 2000 and raising its yearly earnings expectations.
There were gainers, such as Wal-Mart, advanced 77 cents to $54.53 after it raised its second-quarter earnings estimate due to stronger-than-expected sales in June.
Investors aren't expected to stop unloading stocks until they see a definite improvement in earnings and until they regain trust in corporate accounting following a string of scandals.
Major U.S. stock gauges slammed to lows unseen since 1997 on Wednesday after Qwest Communications International Inc. inflamed worries over corporate accounting and Standard & Poor's booted a handful of companies from its prestigious index.
"There are no buyers and that's a proxy for a major lack of confidence in U.S. companies,'' said Gary Wedbush, head of trading at Wedbush Morgan Securities.
Wall Street has suffered three straight days of deep declines. The market has been on a mostly downward spiral as blow-ups like WorldCom Inc.'s $3.85 billion accounting scandal, fears of another terror attack on the U.S.and apprehension over the upcoming quarterly earnings season rattle the market.
Qwest lost almost one-third of its value after federal prosecutors launched an unspecified criminal probe into the No. 4 U.S. local phone company. The latest in a string of high-profile investigations into Corporate America dealt another stinging blow to investor confidence.
Royal Dutch slumped nearly 10 per cent after the Anglo-Dutch oil group and six other foreign firms were yanked from the S&P 500 index to be replaced with seven U.S. companies. Money managers dumped the foreign shares to make room for the new members of the benchmark index.
Stock-market index compiler S&P sent seven foreign companies reeling after saying it would yank them from its S&P 500 index to create a U.S.-based benchmark. Royal Dutch fell $5.16 to $50.73. Consumer products giant Unilever lost $4.15 to $60.97. Canadian firms Nortel Networks, Alcan, Barrick Gold, Placer Dome and Inco also slumped on news of their impending exit.
Accounting concerns spread to the White House. A public interest group sued U.S. Vice President Dick Cheney and the oil services company he once ran, Halliburton Co., alleging they defrauded shareholders by overstating the company's revenues. Halliburton shares fell 57 cents to $13.55.
The civil lawsuit was filed in federal court one day after U.S. President George W. Bush went to Wall Street to outline proposals aimed at stopping the accounting scandals that have shaken investor faith in U.S. financial markets. Auto makers added more pressure to the market. AP, Reuters
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