Sun, Oct 14, 2001 page10

• Financial shares bring S&P 500 lower

  US EQUITIES A growing risk from Americans who may be more likely to default on credit-card loans has hurt Providian Financial and some other finance-related firms

  • BLOOMBERG
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  The Standard & Poor's 500 Index fell for the first time in three days as a drop in profits at credit-card company Providian Financial Corp heightened concern more consumers will default on loans.

  Wal-Mart Stores Inc and Home Depot Inc declined after retail sales tumbled last month, fueling worries a rebound in corporate profits could be delayed longer than expected. The NASDAQ Composite Index erased a 3 percent loss sparked by a report of anthrax in New York.

  "You don't see panic selling, but people are pulling their buy orders and waiting to see what happens," said Leo Smith, head of trading at Putnam Investments, which manages US$400 billion.

  "Any second [terrorist] incident would undermine the confidence of the individuals participating in the marketplace."

  The S&P 500 dropped 5.78, or 0.5 percent, to 1,091.65, with declines in eight of its 11 industry groups. For the week, the index rose 1.9 percent.

  The Dow Jones Industrial Average shed 66.29, or 0.7 percent, to 9,344.16. It gained 2.5 percent this week.

  The NASDAQ advanced 1.93, or 0.1 percent, to 1,703.40, bringing its gain this week to 6.1 percent.

  Each of the benchmark indexes has risen in the past three weeks, the first time that's happened in more than a year. With the gains, the NASDAQ has climbed 0.5 percent above its level prior to the Sept. 11 terrorist attacks.

  The S&P 500 has fallen 0.1 percent below its pre-attack close, and the Dow has declined 2.7 percent lower than it was on Sept. 10.

  More than 1.3 billion shares traded on the New York Stock Exchange, 4 percent above the three-month average. More than three stocks fell for every two that advanced on the Big Board. Six stocks declined for every five that advanced on the Nasdaq Stock Market.

  Financial stocks tumbled on concern consumers will have trouble paying their bills.

  Providian plunged US$6.90, or 34 percent, to US$13.45, its lowest price in almost four years. The No. 5 issuer of Visa and MasterCard credit cards set aside US$186 million in its third quarter for potential loan losses and took a charge of about US$85 million in anticipation of interest charges and fees it won't be able to collect. It also had higher-than-expected credit losses last month.

  Capital One Financial Corp fell US$2.90 to US$44.80; Household International Inc shed US$2.06 to US$54.89; and Citigroup Inc, the largest financial services company, lost US$0.69 US$45.06. Bank of America Corp fell US$1.59 to US$53.01.

  Retail stocks dropped after the Commerce Department said sales to consumers slumped 2.4 percent in September, their biggest drop in almost 10 years.

  Home Depot, the largest home improvement chain, declined US$1.42 to US$41.68. Wal-Mart, the largest retailer, fell US$0.59 to US$52.90, and Target Corp slipped US$1.38 to US$31.67.

  Investors and economists said they are eager for additional reports that will be a better gauge of how the attacks are affecting retailers.

  "The September numbers are so heavily distorted by the attack and its aftermath, it's going to be another month at least before we can see the real situation," said Jay Mueller, an economist at Strong Capital Management Inc.

  Airline stocks declined after NBC News said one of its employees had anthrax. The American Stock Exchange Airline Index lost 6 percent, with all 10 members declining.

  The index is 38 percent below it pre-attack level. Northwest Airlines Corp fell 81 cents to US$12.99; AMR Corp, parent of American Airlines, lost US$1.69 to US$20.51; UAL Corp owner of United Airlines, shed US$1.47 to US$18.63; and Delta Air Lines Inc fell US$2.03 to US$25.80.

  Shares of companies with products that can be used to protect people from biological or chemical attacks gained.

  Cepheid Inc, a maker of systems that detect disease-causing agents, rose US$2.31 to US$7.78. The stock is more than five-times higher than before Sept. 11. Cepheid's GeneXpert, which should be introduced this quarter, detects contamination in a variety of substances, including blood.

  Nanogen Inc soared US$1.05, or 14 percent, to US$8.61. The biomedical equipment maker earlier this week said it received a grant from the US Army for $1.5 million to aid its development of miniaturized electronic devices for detecting biological warfare agents in human blood samples.

  Investors bought shares of companies whose earnings prospects are improving.

  Juniper Networks Inc advanced US$4.42 to US$21.06. The No. 2 maker of gear to direct Web traffic gave a fourth-quarter forecast that beat estimates.

  Its larger rival Cisco Systems Inc, the world's biggest computer-networking company, gained 49 cents to US$16.95 and Ciena Corp, a maker of fiber-optic equipment, rose US$1.89 to US$17.13.

  "People are looking for a recovery sometime next year," said Joseph DeMarco, a trader at HSBC Asset Management Inc, adding that investors are "starting to feel more confident [and are] looking for places to put their money."

  DoubleClick Inc climbed US$0.65 to US$8.14. The online advertising company said it would have a narrower-than-expected fourth-quarter loss, excluding non-cash and one-time charges, as it cut jobs to reduce expenses.

  Network Associates Inc advanced US$0.38 to US$18.38. The software maker said fourth-quarter profit, excluding non-cash and one-time charges, would top estimates.

  Storage Technology Corp gained US$2.03 to US$15.08. The maker of computer data-storage systems said it expects third-quarter profit to exceed analysts' forecasts because cost-cutting.

  NRG Energy Inc gained US$0.93 to US$19.05 after the owner and operator of power generators reported third-quarter profit that beat estimates as it acquired and built more power plants.

  TheraSense Inc rose US$5.92 to US$24.92 after the developer of a less painful way for diabetics to test their blood sugar raised US$114 million in an initial stock sale, the second IPO since Sept. 11.

  All three major US stock indexes hit their low for the year on Sept. 21, the end of the first week of trading in US stocks following the terrorist attacks. Some investors said those levels may not be their low point for the year.

  "We could test the lows again," said Patrizio Merciai, chief strategist at Lombard Odier in Geneva, Switzerland, which manages US$60 billion. "All the data until the end of the year will be pretty awful, and we have to discount that."

  The Russell 2000 Index of smaller stocks dropped 2.45, or 0.6 percent, to 428.59. The Wilshire 5000 Total Market Index, the broadest measure of US shares, declined 59.92, or 0.6 percent, to 10,049.12, indicating the market value of US stocks declined US$68.9 billion. Since the attacks, the value of US stocks has dropped US$63.6 billion.

  For your information

  Major indexes

  * The NASDAQ advanced 1.93, or 0.1 percent, to 1,703.40. * The Dow Jones Industrial Average shed 66.29, or 0.7 percent, to 9,344.16. * The S&P 500 dropped 5.78, or 0.5 percent, to 1,091.65.
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