Stocks in the US tumbled of Friday, driving the Dow Jones Industrial Average to its lowest level since 1998, as regulatory probes, accounting errors and disappointing forecasts drove investors from the market.
"More and more people are getting out," said Peter Cooke, who helps manage US$15 billion at Glenmede Trust Co. "They've watched their portfolios go down, down, down, and now they just want to protect what they've got."
Cooke has been selling stocks, putting the money in bonds or leaving it in cash.
Johnson & Johnson led the Dow's loss and had its steepest decline in almost 15 years after saying one of its drug factories is under criminal investigation. Nicor Inc. plunged as the utility owner disclosed losses and improper bookkeeping. Sun Microsystems Inc. and PepsiCo Inc slumped after saying growth is slowing.
The Dow dropped 390.23 to 8,019.26, the lowest since October 1998, as the world's biggest stock market fell for a ninth week.
The 4.6 percent retreat was the largest since Sept. 17, and the average became the last of the three major US indexes to breach the lows that followed the Sept. 11 attacks.
The Standard & Poor's 500 Index fell 33.81, or 3.8 percent, to 847.75. The NASDAQ Composite Index lost 37.80, or 2.8 percent, to 1,319.15.
New York Stock Exchange trading amounted to 2.63 billion shares, the highest total ever, according to preliminary figures.
An overhaul of the S&P 500 that replaced the index's seven non-US members contributed to the activity.
During the past two weeks, the Dow dropped 15 percent and the S&P 500 declined 14 percent. Those losses were the biggest for any two-week period since the market's crash in October 1987.
The outlook for corporate earnings has worsened as stocks have tumbled. Ninety-three companies in the S&P 500 have said third-quarter earnings will be lower than forecast, according to Thomson First Call. That's more than twice the 40 that have said they will surpass estimates.
US stocks are mired in a third year of declines as earnings have yet to rebound and corporate accounting and management lapses at companies such as WorldCom Inc have undercut investor confidence.
"No matter what I think the market goes down," said Alan Hoffman, who manages US$1 billion at Value Line Asset Management. "It's god-awful psychological black death out there. I don't have any projections or investment advice."
Only one of the Dow's 30 stocks, Boeing Co, has risen for the year as the average has dropped 20 percent. The S&P 500 has lost 26 percent and the NASDAQ has fallen 32 percent.
More than three stocks fell for every one that rose on the Big Board Friday, and more than two declined for every one that gained on the NASDAQ Stock Market.
The Dow dropped 7.7 percent for the week, the S&P 500 lost 8 percent and the NASDAQ declined 4 percent.
Johnson & Johnson fell US$7.88 to US$41.85. The US Food and Drug Administration is investigating a Puerto Rico plant where Eprex, an anemia treatment, is produced. The 16 percent drop was the biggest since Oct. 19, 1987, the day of the crash. Before today, the shares had fallen by the same percentage this year.
DaimlerChrysler AG tumbled 8.2 percent after saying the US Justice Department is conducting a criminal probe into allegations of price fixing at its Mercedes-Benz dealers. The company's US-traded shares dropped US$3.90 to US$43.65.
Nicor plunged US$15.26, or 40 percent, to US$22.75. The Illinois utility said it found differences between estimates of natural-gas sales and actual revenue at a joint venture with Dynegy Inc. Dynegy fell US$0.53 to US$3.97, extending its drop this year to 84 percent, the biggest in the S&P 500.
PepsiCo dropped US$4.10 to US$36.20. The second-largest soft-drink producer said second-quarter profit and sales at its Frito-Lay snack-foods unit rose less than forecast. Coca-Cola Co, the largest soft-drink maker, slid US$2.84 to US$45.09.
Sun Microsystems fell US$1.55 to US$4.25. The maker of computer servers said fiscal 2003 earnings and sales will be less than analysts predicted and it will have a "slight" loss this quarter.
Microsoft Corp fell US$1.55 to US$49.56. The world's biggest software company lowered its earnings and sales target for this year amid a slump in personal-computer demand.
HPL Technologies Inc fell US$9.86 to US$4.24 before NASDAQ halted trading. The software maker is investigating financial and accounting irregularities and said CEO David Lepejian has been fired. A "material amount" of revenue may have been improperly booked during one or more earlier periods, the company said.
Royal Dutch Petroleum Inc fell US$4 to US$42 and Unilever NV fell US$3.17 to US$53.40. The two Dutch companies were taken out of the S&P 500 after the close of trading along with five Canadian companies: Alcan Inc, Barrick Gold Corp, Inco Ltd, Nortel Networks Corp and Placer Dome Inc.
United Parcel Service Inc, one of the replacements, rose US$4.95 to US$67. Prudential Financial Inc, which climbed US$1.06 to US$32.45, and Goldman Sachs Group Inc, which gained US$1.40 to US$77, also joined the index.
The other four to be added were EBay Inc, Electronic Arts Inc, Principal Financial Group Inc and SunGard Data Systems Inc.
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