Dow slides after Honeywell issues warning

The Dow Jones Industrial Average fell and benchmark indexes headed toward their third straight losing week after Honeywell International Inc cut its profit estimate and an index of consumer confidence dropped.

Signs of a slowing economic recovery added to investors' concerns over possible US military action against Iraq as President George W. Bush presses his case for a strike against Saddam Hussein.

"There's a pretty long laundry list," said Brett Crawford, who helps manage US$4.4 billion at Mesirow Asset Management in Chicago. "Recession, war, terrorist threats, the economy."

He's been buying shares of consumer companies, including Tiffany & Co.

The Dow Jones Industrial Average shed 85.86, or 1 percent, to 8,293.83 as of 2:17pm New York time Froday. Honeywell contributed more than half the drop.

The Standard & Poor's 500 Index swung between gains and losses and was down 0.07 to 886.75. Wal-Mart Stores Inc gained after the government reported retail sales rose. The NASDAQ Composite Index climbed 6.95, or 0.5 percent, to 1,286.63, led by Intel Corp. and Adobe Systems Inc.

For the week, the S&P 500 has dropped 0.4 percent, the Dow 1.1 percent and the NASDAQ 0.7 percent. Bush this week has lobbied for support to oust Hussein, saying Iraq defied UN resolutions requiring inspections for biological, chemical and nuclear weapons.

Iraqi Deputy Prime Minister Tariq Aziz today rejected the unconditional return of UN weapons inspectors.

The University of Michigan's preliminary sentiment index dropped to 86.2 this month from a final reading of 87.6 in August.

The index reading for September was the lowest since November.

"The lousy consumer confidence number today will increase people's anxiety" about corporate profits and the markets, said Gil Knight, who helps manage US$11 billion for Allied Investment Advisors Inc Allied has been buying stocks likely to hold up in a slow economy, such as PepsiCo Inc and Gillette Co, he said.

Rising and falling stocks were about even on the New York Stock Exchange and the NASDAQ Stock Market. Some 810 million shares traded on the Big Board, New York time, up 3.7 percent from a week ago.

Honeywell, the biggest maker of automated controls and aircraft-cockpit electronics, slumped US$4.32, or 15 percent, to US$24.02. It estimated full-year earnings per share of US$2 to US$2.05.

In July, Honeywell cut its forecast to as low as US$2.25.

It had the largest percentage loss in the S&P 500.

"Honeywell's earnings are a disaster," said Patrick Connors, a trader at Greenwich Prime Trading, which manages accounts for 40 hedge funds.

United Technologies Corp, another aerospace supplier, lost US$2.10 to US$59. General Electric Co, the biggest maker of jet engines, fell US$1 to US$27.

Boeing Co, the world's largest aerospace company, declined US$0.66 to US$35.79 as its machinists vote on whether to strike tomorrow for guarantees of job security and higher pensions. The S&P 500 Industrials Index, whose members include Honeywell and General Electric, slumped to a six-week low.

Lucent Technologies Inc tumbled US$0.21, or 13 percent, to US$1.44 after the biggest US telephone-equipment maker cut its fourth-quarter forecast. It expects revenue to drop as much as 25 percent from the third quarter and said it won't return to profitability until the end of its 2003 financial year.