September 21, 2001

THE MARKETS

    

Stocks Close Lower Again; Dow Drops 14.3 Percent for Week


By SHERRI DAY


tocks dropped today for their fifth straight loss on a day of volatile trading, as the Dow Jones industrial average posted its worst weekly decline since the Great Depression.

The expected American military retaliation for last week's terrorist attacks cast a pall on the stock market, where investors remained unsettled by the likelihood of a recession and the gloomy prospects for corporate profits.

Stocks plunged at the opening of trading, failed in their attempt to rally back and then fell again.

The Dow industrials closed down 140.40 points, or 1.7 percent, to 8,235.81, after diving more than 300 points shortly after the opening and then bouncing up about 60 points before retreating.

For the week, the Dow fell 14.3 percent, a five-day percentage loss unmatched since the week ended July 21, 1933, when it fell 15.6 percent, according to Gibbons Burke, the editor of MarketHistory.com, a market research firm.

The technology-weighted Nasdaq composite index fell 47.74 points, or 3.3 percent to 1,423.19. It fell 16.1 percent for the week. The broader Standard & Poor's 500-stock index lost 18.74 points, or 1.9 percent, to 965.80. For the week, it fell 11.6 percent.

This week's sell-off has sent the stock market down to its lowest levels since 1998. It followed a four-day shutdown of Wall Street after hijackers crashed commercial jetliners into the World Trade Center and the Pentagon. On Thursday night, President Bush threatened Afghanistan's leaders with a military assault unless they immediately turn over Osama bin Laden, the main suspect in the terrorist attacks.
 
 ``Something like this comes along and there's so many open questions,'' said Stuart Freeman, chief equity strategist at A.G. Edwards & Sons. ``By the time the market opens, you've got a lot of human minds that are fearful and panicked. It's really tough to be fearful and panicked about one thing and not on something else. It's tough to think about, `gee, stocks are cheap.'''

Some analysts said trading was mildly impacted today by ``triple witching,'' which occurs on the third Fridays in March, June and September when stock options, stock-index options and index futures contracts all expire at the same time.

``No one should be surprised; the market was going to bounce at some point here,'' said Jon Brorson, director of equities at Northern Trust at Northern Funds. ``You just don't go straight down.''

He added: ``What you're wrestling with economically is very, very difficult times near term, but hopefully stronger economic times are down the road. Everybody knows the near term is lousy, but with all the liquidity and the fiscal stimulus, it's going to get better.''

Perhaps the most optimistic news for the market came from General Electric, which rose 93 cents, to $31.30, in late-afternoon trading after Jeffrey R. Immelt, its chairman and chief executive, said today that the company expected to post double-digit earnings growth in 2001 and could possibly record growth at the same pace in 2002.

The airline industry, which has been hard hit by fewer travelers, grounded flights and huge layoffs in the wake of the terrorist attacks, bounced on the possibility of an infusion of cash from the federal government. Early today, lawmakers worked out most of the details of the $15 billion aid package. The package, which is supported by the Bush administration, is expected to be voted upon by Congress today.

Airline stocks, which have been battered all week, rose on the news. Delta was up 62 cents, to $22.47; Continental picked up 71 cents, to $14.66, and America West rose 71 cents, to $2.50.

But AMR, the parent company of American Airlines fell 1.7 percent; UAL, the parent company of United Airlines also lost 10 cents, to $17.13. Northwest Airlines dropped 56 cents, to $10.45, after the company said it cut about 10,000 workers, or almost 19 percent of its work force, and reduced its flight schedule by about 20 percent.

Weak corporate profits in a variety of sectors continued to overshadow any positive news in the market.

CVS, one of the largest drugstore chains, lowered its forecast for the third quarter because the company projects slowing sales in the wake of the terrorist attacks. The company had previously forecast earnings of 35 to 37 cents a share. It now expects to earn 30 cents to 32 cents a share. Shares of CVS declined $3.16, to $32.19.

Navigant International, a travel management service for business travelers, fell 36 cents, to $5.79, after the company said it was trimming its work force by 20 percent, lowering salaries by 5 to 12 percent and freezing capital spending. The company attributed the cutbacks to the sharp decrease in travel following the terrorist attacks.

EMC, a computer storage company, fell $1.47, to $11.15, after its president and chief executive, Joe Tucci, said, ``It is highly unlikely that EMC will break even in our fiscal third quarter.'' Mr. Tucci said the company would reduce its operating costs by cutting more than 2,000 jobs.

Dow Chemical declined 18 cents, to $29.76, after it said it would not meet earnings forecast for the third quarter because of weak demand. Company officials did not disclose revised earnings figures. They had initially forecast earnings of 25 to 35 cents a share. A year earlier, the company earned 48 cents a share.

Ford Motor lost 15 cents, to $15.34, after a jury in Miami ordered the company to pay $15.4 million to a young girl who was severely injured when the tire on a 1999 Ford Econoline blew out and the van rolled over. The jury found that Ford had manufactured a defect in the tire valve.

Global equities also continued to dive as the prospect of a long protracted war and continued economic weakness rattled investors.

In Tokyo, the Nikkei 225 index, lost 230.17 points, or 2.35 percent, to close at 9,554.99. Hong Kong's Seng Hang stock index fell 383.78 points, or 4.12 percent, to 8,934.20.

Meanwhile in Europe, the British FTSE 100 index dropped 123.20 points, or 2.7 percent, to close at 4,433.70. The German DAX declined 22.44 points, or 0.59 percent, to 3,787.23, and the French CAC-40 fell 85.31 points, or 2.3 percent, to 3,787.23.

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