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Stocks succumbed to selling pressure again on Tuesday, pushing the Dow Jones industrial average to its lowest level in nearly four years, as downbeat corporate news including questions about Enron's lenders overshadowed some upbeat profit reports.
The Dow lost 82.24 points, or 1.06%, to 7,702.34. The tech-heavy Nasdaq composite index, meanwhile, slid 53.64 points, or 4.18%, to 1,229.01. The broader Standard & Poor's 500-stock index gave up 20.21 points, or 2.47%, to 799.64.
After another devastating day on Wall Street, investors will be looking ahead to Wednesday, which will bring more earnings reports from top U.S. companies. Heading the list of most-anticipated results will be media conglomerate AOL Time Warner (AOL
). Also on the list are oil-services company Halliburton (HAL
) and copper producer Phelps Dodge (PD
).
There will be few economic data reports to guide the market, however, before Thursday when reports on June durable good orders and existing home sales are due out. Also scheduled for that day is a final reading on consumer sentiment for last month.
Unnerving investors on Tuesday was news that banks Citigroup (C
) and JP Morgan Chase (JPM
) were being probed by congressional investigators. Lawmakers contend that the banks may have helped energy trader Enron with some of its questionable accounting schemes. Both stocks are components of the Dow and fell sharply on the news.
Dynegy (DYN
) plunged 63% to $1.25 after the energy and power supplier lowered its 2002 guidance for cash flow to $600 million to $700 million, vs. the previous outlook of $1 billion, amid a downturn in marketing and trading activities. On Monday, Standard & Poor's cut its credit rating for Dynegy to junk status.
The telecom sector was also beaten up again. No. 1 U.S. long-distance company AT&T (T
) posted a quarterly net loss of $12.7 billion, the largest in more than two decades, as it wrote down the value of cable-television assets.
Struggling telecom gear maker Lucent (LU
) reported a $7.9 billion net loss including a charge and warned about letting go another 7,000 employees because of the stubborn telecom spending slowdown.
Meanwhile, computer chip equipment maker Novellus (NVLS
) posted an 80% drop in quarterly profits because of weaker demand for its products.
On the bright side, cellphone chipmaker Texas Instruments (TI
) said its quarterly profits more than doubled thanks to strong sales at virtually all its units.
Drugmaker Wyeth (WYE
) posted sharply higher quarterly earnings driven by strong sales of key products including antidepressant Effexor.
Chocolate maker Hershey Foods (HSY
) posted 20% higher quarterly earnings on higher sales of candies like Reese's peanut butter cups.
And consumer products company Gillette (G
) posted a 27% rise in quarterly profits thanks to higher sales of Mach3 razors and lower costs.
The top-performing S&P 500 group on Tuesday was household products.
Treasury Market
Treasuries ended mostly higher in price on the drop in equities.
World Markets
European markets ended lower. In London, the Financial Times-Stock Exchange 100 index was down 37.50 points, or 0.96%, to 3,858.
France's CAC 40 shed 79.53 points, or 2.53%, to 3,070.16.
Germany's DAX index was off 175.60 points, or 4.76, to 3,515.83 as there was little reaction to a report that German June import and producer prices fell.
Asian markets ended higher. In Japan, the Nikkei 225 index gained 26.62 points or 0.26%, to 10,215.63 led by exporter shares, as a wave of buy-backs on the back of the yen's weakening, emerged in the afternoon sessino.
In Hong Kong, the benchmark Hang Seng index lost rose 203.64 points, or 2.01%, to close at 10,313.89.
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Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
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