Sun, May 12, 2002 - Page 10 News List

Computer shares lead stocks in US lower

BLOOMBERG , NEW YORK

US stocks fell on concern slowing economic growth may deepen the slump in shares of computer-related and telephone companies, the year's biggest losers. The Standard & Poor's 500 Index dropped for the seventh week in eight.

"I don't think there's confidence built in that the economy has turned the corner and that we're going to see the earnings," said William Dwyer, who oversees US$8 billion as chief investment officer at M&T Asset Management in Buffalo, New York.

Microsoft Corp was the biggest drag on benchmark indexes after antitrust regulators in Europe said their concerns are "considerably" different from those in the US.

The S&P 500 fell 18.02, or 1.7 percent, to 1,054.99, with technology companies including Intel Corp and telephone stocks such as SBC Communications Inc contributing 42 percent of the drop. The Dow Jones Industrial Average slid 97.50, or 1 percent, to 9,939.92. The NASDAQ Composite Index slumped 49.64, or 3 percent, to 1,600.85.

This week, the S&P 500 lost 1.7 percent as investor optimism triggered by better-than-expected earnings at Cisco Systems Inc was tempered after Wal-Mart Stores Inc. posted weaker-than-forecast sales.

The Dow dropped 0.7 percent and the NASDAQ slid 0.8 percent, wiping out Wednesday's 7.8 percent rally.

The three indexes have all declined this year, paced by the NASDAQ's 18 percent loss.

All 10 industry groups that make up the S&P 500 fell as a survey showed the economy is likely to slow this quarter. Growth will probably pick up little in the second half, according to today's Blue Chip Economic Indicators survey.

This month's poll of 51 economists forecasts the economy will expand at a 3.3 percent annual pace in the third quarter, down from a consensus of 3.6 percent last month.

Major indexes

* The S&P 500 fell 18.02, or 1.7 percent, to 1,054.99.

* The NASDAQ Composite Index slumped 49.64, or 3 percent, to 1,600.85.

* The Dow Jones Industrial Average slid 97.50, or 1 percent, to 9,939.92.


First-quarter earnings for companies in the S&P 500 fell 12.3 percent, their fifth straight drop, according to Thomson First Call. Analysts expect profits will increase 14.5 percent for 2002, though that estimate has been trimmed almost 2 percentage points the past month.

"We'll have to wait for the end of the year to see some recovery," said Tom Walker, head of US equities at Martin Currie Investment Management in Edinburgh, which oversees about US$10 billion. He sold shares of Cisco on Wednesday after they soared 24 percent.

Some 1.17 billion shares traded on the New York Stock Exchange, down 11 percent from the three-month daily average.

Almost two stocks declined for every one that gained on the Big Board.

All 13 members of the S&P index of phone service companies fell. The group lost 3.7 percent, extending the decline this year to 32 percent. Investors are concerned repaying billions of dollars in debt issued to fuel acquisitions and build networks may get more difficult because of overcapacity and falling prices.

SBC Communications lost US$0.90 to US$30.45 and Verizon Communications Inc dipped US$0.80 to US$39.35.

Qwest Communications Inc dropped US$0.86 to $5.04 after saying it will take longer to pay sales commissions to lower expenses. The fourth-biggest local-phone company has a US$3.39 billion bank loan due at year's end.

WorldCom Inc tumbled US$0.43 to US$1.58 a day after US$32 billion of its debt was downgraded to junk by Moody's Investors Service. The second-biggest long distance phone company has plunged 89 percent this year.

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