Sun, Oct 06, 2002 page10

• US equities decline after missed earnings reports

  • BLOOMBERG
  • • 
    • 
    • 

  US stocks fell, driving the Dow Jones Industrial Average to an almost-five-year low. The dollar rose, while two-year Treasury notes dropped.

  The following is a roundup of activity in the US market.

  Shares tumbled as companies including Boeing Co, EMC Corp, Northern Trust Corp and Schering-Plough Corp said third-quarter results were below forecasts. Stocks extended declines after a California jury ruled Philip Morris Cos must pay US$28 billion in damages to a smoker who contracted lung cancer.

  "You can't dance around fast enough to avoid the blows," said Owen Burman, a portfolio manager at Riggs Investment Management Corp, which oversees US$2 billion in Washington. "I don't have any confidence to buy."

  The earnings reports heightened investor concern over slowing profit growth and drove down the Dow by 188.79 points, or 2.5 percent, to 7,528.40. That's the lowest close since Nov. 13, 1997.

  The Standard & Poor's 500 Index dropped 18.37, or 2.2 percent to 800.58, 2 points above the five-year low reached in July. The NASDAQ Composite Index reached its lowest since Sept. 6, 1996, declining 25.66, or 2.2 percent, to 1,139.90.

  For the week, the S&P 500 dropped 3.2 percent. It last fell six weeks in a row in February and March 2001. The Dow lost 2.3 percent and the Nasdaq 4.9 percent amid concern an eight-day West Coast port shutdown will slow the economy and as the Bush administration works to get congressional authorization for the use of force against Iraq.

  The dollar had its biggest gain in three weeks against the euro and rose against the yen after a government report showing the US jobless rate fell last month eased concern the economy is losing momentum.

  The report "is damping some of the significant pessimism about the US economy," and is "the primary influence for the dollar's gain across the board," said Michael Malpede, senior foreign-exchange analyst at Refco Group in Chicago.

  The US currency strengthened 0.9 percent to 97.96 cents per euro from 98.79 late yesterday, its biggest gain since Sept. 13.

  The dollar rose to ?123.24 from ?122.60 yesterday, for a 0.6 percent rise this week.

  Gains for the dollar began after the government said the US unemployment rate dropped to 5.6 percent in September from 5.7 percent in August. Economists had forecast an increase to 5.9 percent.

  Two-year Treasury notes fell for the third day in four the unexpected decline in the unemployment rate prompted some investors to pare bets that the Federal Reserve will cut interest rates.

  The jobs report "will reduce the likelihood of another interest rate cut; why would the Fed need it?" said Eric Cheung, who manages US$8 billion in fixed-income assets at Wilmington Trust Corp in Wilmington, Delaware. He said he has been selling Treasuries and buying corporate bonds as a bet that economic growth will pick up.

  The 1 7/8 percent note maturing in 2004 fell more than 1/16 to 100 3/16 as its yield rose 5 basis points to 1.78 percent, four days after reaching the lowest level since the Treasury began regular sales of the securities in 1972. The note still gained for a seventh straight week.

  Treasuries maturing in 10 years and more gained as a decline in stocks bolstered demand for the safety of government debt.

  The 4 3/8 percent note maturing in 2012 rose more than 1/8 to 105 27/32. The note's yield fell 2 basis points to 3.66 percent. A basis point is 0.01 percentage point.

  For your information

  Major markets

  * The Dow Jones Industrial Average fell by 188.79 points, or 2.5 percent, to 7,528.40, after ompanies including Boeing Co, EMC Corp, Northern Trust Corp and Schering-Plough Corp said third-quarter results were below forecasts. * The Standard & Poor's 500 Index dropped 18.37, or 2.2 percent to 800.58, 2 points above the five-year low reached in July. * The NASDAQ Composite Index reached its lowest since Sept. 6, 1996, declining 25.66, or 2.2 percent, to 1,139.90.
• Most Popular

  • 1

    China coast guard is escorting more illegal fishing boats

  • 2

    Uncrewed surface vehicle unveiled

  • 3

    Panama stun US to reach final of Nations League

  • 4

    Piastri wins F1 Chinese Grand Prix

  • 5

    France see off Croatia on penalties