Print

Mail

wiki links

Stocks fall on signs of slow economy

Market indexes * The NASDAQ Composite Index fell 30.99, or 1.4 percent, to 2,251.03. * The Standard & Poor's 500 index lost 15.28, or 1.2 percent, to 1,277.89. * The Dow Jones Industrial Average declined 1,17.05, or 1.1 percent, to 11,005.37.

US stocks fell as evidence the economy is slowing raised investor concern that corporate profits won't rebound until next year.

General Electric Co, Wal-Mart Stores Inc and Pfizer Inc led the decline. The New York Stock Exchange had its slowest day this year as some investors stayed out of the market before the three-day Memorial Day weekend.

"We've got this valley of negative news to get through, both on the economy and earnings," before lower interest rates kick in, said John Waterman, chief investment officer of Rittenhouse Financial Services, which oversees US$18 billion in Radnor, Pennsylvania. "The market isn't reacting to what's ahead."

The NASDAQ Composite Index fell 30.99, or 1.4 percent, to 2,251.03. The Standard & Poor's 500 index lost 15.28, or 1.2 percent, to 1,277.89. The Dow Jones Industrial Average declined 1,17.05, or 1.1 percent, to 11,005.37. The Dow briefly dropped below 11,000 for the first time since May 16.

For the week, the NASDAQ gained 2.4 percent, its fifth weekly advance in seven. The Dow lost 2.6 percent this week, and the S&P 500 declined 1.1 percent.

First-quarter economic growth was slower than previously reported and orders for durable goods fell more than expected in April, reports showed, fueling the concern that earnings won't rise until at least next year and that stocks have climbed too rapidly during their seven week-rally.

In addition, Federal Reserve Chairman Alan Greenspan said last night that the US still faces a period of slow economic growth. In his first assessment of the economy's prospects since February, Greenspan said that while the US is experiencing only a "pause" in its record 10-year expansion, weakness will persist for several more quarters.

The NASDAQ has climbed 37 percent since touching a 2 1/2-year low April 4 as the Fed's five interest-rate cuts boosted optimism that the economy and profits will turn around.

Stocks were also hurt as trading slowed before the long weekend and some investors sold shares that had gained during the market's surge. US exchanges will be closed tomorrow for a holiday.

Companies are still feeling the effects of the slowdown in the economy and the cutback in spending on new equipment by telecommunications companies.

ADC Telecommunications Inc fell US$1.69 to US$8.60 after the telecommunications-equipment maker said third-quarter results will fall short of estimates after reporting a fiscal second-quarter loss on lower sales.

Fiber-optic equipment maker Ditech Communications Corp slumped US$6.64 to US$9.99. The company forecast lower revenue for the next two quarters and said profit in the fiscal fourth quarter was below analysts' forecasts.

Inet Technologies Inc dropped US$1.40 to US$8.72. The maker of communications software said it plans to eliminate 115 jobs, or 22 percent of its workforce, due to falling demand for its equipment and services. The cuts may save about US$5.5 million this year, the company said.

Home-improvement retailer Lowe's Cos rose US$0.06 to US$71.82 after saying it will boost its dividend to US$0.04 a share from Companies are still feeling the effects of the slowdown in the economy and the cutback in spending on new equipment by telecommunications companies.

ADC Telecommunications Inc fell US$1.69 to US$8.60 after the telecommunications-equipment maker said third-quarter results will fall short of estimates after reporting a fiscal second-quarter loss on lower sales.

The Russell 2000 Index of smaller stocks fell 1.78, or 0.4 percent, to 508.62. The Wilshire 5000 declined 120.48, or 1 percent, to 11,849.9.
This story has been viewed 1642 times.