Sun, Dec 29, 2002 - Page 10 News List

S&P, Dow at lowest level since October

BLOOMBERG , NEW YORK

US stocks dropped, sending the Standard & Poor's 500 Index and Dow Jones Industrial Average to their lowest in more than two months, amid concern higher oil prices will crimp spending by companies and consumers.

General Electric Co led the decline as all 30 members of the Dow fell. Financial stocks including Citigroup Inc. contributed a quarter of the S&P 500's drop after securities executives said the industry may extend its slump.

Diplomatic disputes with Iraq and North Korea and signs corporate profit growth is slowing also deterred investors. The S&P 500 and Dow are heading to their worst December since 1931, capping their first three-year losing streak in six decades.

"There's a lot of news out there that sounds pretty bad," said Todd Trautman, who helps manage US$4 billion at First National Bank of Omaha. "It's a good opportunity for people to take some money off the table."

He has reduced his stake in consumer stocks including Newell Rubbermaid Inc.

The S&P 500 declined 14.26, or 1.6 percent, to 875.40, the lowest since Oct. 16. The Dow reached its lowest since Oct. 17, falling 128.83, or 1.5 percent, to 8,303.78. The NASDAQ Composite Index slid 19.58, or 1.4 percent, to 1,348.31.

So far this month, the S&P has dropped 6.5 percent and the Dow 6.7 percent. The NASDAQ has slumped 8.8 percent.

Today, more than two stocks fell for every one that rose on the New York Stock Exchange. Trading totaled 757 million shares, half the daily six-month average and the second-slowest full session this year. Friday's was the slowest.

Higher crude-oil prices hurt plastics and chemicals companies, which use oil as a raw material. The price of crude rose to US$32.76 a barrel, the highest since Nov. 30, 2000, in New York trading. Crude has gained 65 percent this year.

Major markets

* The S&P 500 declined 14.26, or 1.6 percent, to 875.40.

* The Dow reached its lowest since Oct. 17, falling 128.83, or 1.5 percent, to 8,303.78.

* The NASDAQ Composite Index slid 19.58, or 1.4 percent, to 1,348.31.


"Everyone's been hoping it'd break and come down the other way, but it hasn't and that adds to the nervousness," said Donna Van Vlack, head trader at Brandywine Asset Management, which oversees US$8 billion in Wilmington, Delaware.

General Electric, whose plastics unit supplies the automotive and computer industries, shed US$0.60 to US$24.70. It was the biggest drag on the S&P 500.

Dow Chemical Co, the largest US chemical company, lost US$1.09 to US$29.11. Hercules Inc, the world's largest maker of chemicals for papermaking, slumped US$0.51 to US$8.67.

Financial-services companies declined after industry executives said there will be fewer bankers a year from now as Wall Street suffers from a two-year revenue plunge of 40 percent.

"The odds are we've got another tough year ahead of us," Stephan Newhouse, co-president of Morgan Stanley's institutional securities business, said.

Citigroup, the world's biggest financial company, dropped US$0.85 to US$35.17. For the week, it declined 7.8 percent, the most in the Dow. Costs to cover loan losses and legal settlements will shave its quarterly earnings by US$1.5 billion.

Morgan Stanley declined US$1.35 to US$40.13. JP Morgan Chase & Co, which plans to cut stock options for most employees by more than half as a result of falling earnings, lost US$0.65 to US$23.80. Goldman Sachs Group Inc dropped US$1.63 to US$67.92.

"They still need to cut costs," said Edward Maraccini, who helps manage US$500 million at Johnson Asset Management in Racine, Wisconsin. "That might mean another round of job cuts just so they can get leaner and more efficient."

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