On Wednesday, the Dow Jones industrial average was weak across the board, sheding 215.22 points, or 2.87%, to 7,286.27. The tech-heavy Nasdaq composite index fell 15.11 points, or 1.34%, to 1,114.10. And the broader Standard & Poor's 500-stock index lost 21.79 points, or 2.73%, to 776.76. The Dow and S&P 500 index hit 5-year lows while the Nasdaq reached a 6-year low.
On Thursday, investors will have monthly sales data for September from most major retailers. First Call/Thomson Financial expects that some an index of some 42 retail chains it tracks will come in with an average increase in same-store sales of 2.9%.
Earnings reports unveiled after the close Wednesday offered some bright spots. Internet portal Yahoo! (YHOO
) reported net income of $28.9 million or $0.05 per diluted share, compared with a net loss last year. The company reported a 50% increase in revenues to $248.8 million.
Fast-food chain company Yum! Brands (YUM
), which runs KFC, Pizza Hut and Taco Bell, said Wednesday after the close that its third-quarter earnings rose 23% on robust sales at Taco Bell and its international business.
Even good news of a temporary resolution to a costly dispute between management and port workers on the West Coast could not inspire buyers during Wednesday's session. A management lockout that cost the U.S. economy an estimated $2 billion daily was temporarily halted by President Bush's decision to order an 80-day court injuction. West Coast ports Wednesday will reopen as union longshoremen head back to work. The injuction is meant to serve as a cooling-off period.
Among Dow stocks Wednesday, General Electric (GE
) fell after Morgan Stanley cut its price target and forecasted the "most difficult operating environment that GE has experienced in at least a couple of decades."
In the technology sector, Hewlett-Packard (HPQ
) said that it does not see a technology sector recovery materializing in 2003.
), the No. 1 maker of fiber-optic cable used by telecom companies, said its third-quarter sales would be on the low side of estimates. The company hinted that more job cuts were ahead.
Automakers sank for a second straight day after Morgan Stanley lowered 2003 earnings per share forecasts. It cut Ford's EPS (F
) to $0.45 from $0.55. Morgan Stanley also cut EPS estimates for General Motors (GM
) and Germany's DaimlerChrysler, citing an expected fall next year in North American production.
Financial stocks were weaker in the wake of a credit downgrade of J.P. Morgan Chase (JPM
) by rating agency Moody's. The company's long term debt ratings were cut to A1 from Aa3.
Airline stocks also stumbled as Credit Suisse First Boston lowered its opinion on the group to marketweight from overweight. Also, a study of major ailrines by Unisys Corp. that indicated that they would have to cut $18.6 billion in costs to compete with low-cost carrier Southwest (LUV
Even Goldman Sachs strategist Abby Joseph Cohen, a noted stock market bull, adopted a more downbeat tone. She lowered her 12-to-18-month target on the Dow industrials to 10,800 from 11,300 and her target on the S&P 500 index to 1,150 to 1,300. Cohen says stocks are undervalued now, but the risk premium is near a three-decade high.
Abbott Laboratories (ABT
) was among the few bright spots in the market as it reported a rise in third-quarter profit of 14% on strong sales of vascular drugs. The company will also restructure to improve efficiency and eliminate excess capacity. The restructuring will require a $100 million to $125 million charge next quarter, but will result in a workforce reduction of 3%.
) reported a rise in earnings with help from deposit fee growth, but the Southeast regional remains troubled by the impact of problem loans.
Treasuries continued to march higher in price on Wednesday, closing at or just shy of multi-decade and all-time highs. Investors sought the safety and liquidity of government bonds as equities continued to crumble, geopolitical concerns remained high, and the economic recovery was called into question.
Investors will have more economic data to chew on as the week comes to a close. On Thursday, reports on initial jobless claims and import prices and wholesale prices are due. On Friday, investors will get a crucial read on the stamina of the American consumer -- September retail sales. Economists are forecasting a drop of 1%. Investors will also digest the September producer price index Friday.
European stocks finished mixed. London's Financial Times Stock exchange index added 11.90 points, or 0.32%, to 3,742.40. Meantime, Germany's DAX index shed 24.21 points, or 0.92%, to 2,597.88, amid news that Chancellor Schroder appointed a new labor and economics minister. France's CAC index fell 37.78 points, or 1.40%, to 2,656.45.
Asian stocks finished down Wednesday. Tokyo stocks Wednesday lost 169.56 points, or 1.95%, to 8,539.34, which is a 19-year low. Mizuho Holdings led the decline as the impacts of bad bank loans in Japan continued to weigh. Hong Kong, the Hang Seng Index finished off just slightly, down 0.06 point, to 8,977.35.