Wall Street closed sharply down across the board on Monday, with semiconductor and financial shares taking a huge hit on economic slowdown concerns.
Markets are anticipating a negative reading on third-quarter gross domestic product on Wednesday, among other crucial economic data due this week, which could confirm a U.S. recession and keep stocks down.
Boeing (BA) plunged over 10% after cutting its 2002 sales forecast by $1 billion. The aircraft engine maker lost the $200 billion Joint Strike Fighter contract to Lockheed Martin (LMT).
Citigroup (C) fell as as nerves frayed over Argentina's debt renegotiation plans. Also, energy dealer Enron (ENE) closed lower after Moody's lowered the company's unsecured long-term debt ratings and kept them on review for downgrade.
Losses in the tech-heavy Nasdaq were led by eBay (EBAY), which dropped amid speculation that the online auction company is now projecting 2002 earnings of $0.70-$0.73, below to in-line with the current consensus of $0.73.
The Dow Jones industrial average lost 275.67 points, or 2.89%, to 9,269.50. The blue-chip average posted its sixth biggest percent drop this year. The tech-heavy Nasdaq composite fell 69.38 points, or 3.92%, to 1,699.58. The broader Standard & Poor's 500 index fell 27.12 points, or 2.46%, to 1,077.49.
But Thomas McManus, an analyst with Banc of America Securities in New York, thinks most individual investors still hold out hope on the stock market, saying "a strong vein of opportunism remains in place."
Among other stocks in the news Monday, Standard & Poor's lowered AT&T's (T) corporate long-term debt rating.
General Motors (GM
announced Monday it will spin off its remaining interest in GM Hughes Electronics (GMH), and merge the new company with Echostar Communications (DISH).
Investors digested more bad news from the airline industry. James E. Goodwin resigned as chairman and chief executive of UAL Corp. (UAL), parent of United Airlines, amid mounting pressure on the carrier's bottom line.
On the earnings radar for Tuesday: reports from consumer products giant Procter & Gamble (PG) and communications company Verizon (VZ).
Treasuries rose on hopes Federal Reserve policymakers will cut interest rates for a tenth time this year. The short end of the Treasury curve is benefiting from a "safe haven" bid as the Argentine default concerns sent the broader emerging markets sharply lower, according to Standard & Poor's MMS.
European markets ended lower Monday. Selling was sparked by worries that U.S. data this week will show that the world's
leading economy is heading into recession. In London, the FTSE 100 index fell 102.70 points, or 1.98%, to 5,085.90. The Paris CAC 40 index dropped 95.39 points, or 2.13%, to 4,383.24. In Germany, the DAX index lost 152.34 points, or 3.16%, to 4,667.92.
In Asia, markets ended lower. In Japan, the Nikkei 225 index fell 182.85 points, or 1.69%, to 10,612.31. Banking shares weighed on the Nikkei following negative comments from Softbank. The Bank of Japan also reported that the economy will contract between 0.9% and 1.2% this fiscal year. In Hong Kong, the Hang Seng index plunged 226.65 points, or 2.18%, to 10,178.09. By Suzanne Robitaille