Monday, March 3rd, 2008
Dow Dives 300 Points on Weak Earnings, Dour Economic Reports
By Jennifer Yousfi
Managing Editor
A fresh round of weak earnings reports and tepid economic indicators fueled concerns about the U.S. economy’s health, which sent the blue-chip Dow Jones Industrial Average into a 300-point tailspin on Friday.
At midday today - thanks to an across-the-board sell-off - all three of the key U.S. stock indices had posted losses. And the downward trend continued into the close.
The Dow - the bellwether of U.S. blue chips - nosedived 315.79 points (-2.51%), to trade at 12,266.39. The tech-laden Nasdaq Composite Index also slumped, shedding 60.09 points (-2.58%), to reach 2,271.48. And the broader Standard & Poor’s 500 Index dropped 37.05 points (-2.71%), to trade at 1,330.63.
Every single sector was down - and by more than 1% -although several key sectors suffered even steeper declines: The basic materials sector slipped 3.21%, the energy sector skidded 3.11%, and the financial sector dropped 3.32%.
Technology was another hard-hit sector, down 2.65% for the day, as shares of Dell Inc. (DELL) helped to pull the sector lower. Fourth quarter earnings decreased by 6% and the company warned that future results "could be adversely impacted by more conservative spending by its customers," in the near-term. Dell shares shed 97 cents to close at $19.90.
By the close, American International Group Inc. (AIG) shares were down more than 6.56% after the insurance giant posted a $5.3 billion fourth quarter loss, the largest in its 89-year history. The stock dropped $3.29 to close at $46.86.
Sprint Nextel Corp. (S) shares were down more than 12.11% on investor fears that the next quarter would bring even more subscriber losses. Sprint shares closed at $7.11, down almost 20% for the week.
"There is certainly no shortage of negative news out there," Michael Magiera, senior analyst at Manning & Napier Advisors, which manages $17 billion in Fairport, New York, said in an interview on Bloomberg Television. "It’s going to be a little while before we work through some of this."
The U.S. Commerce Department reported that consumer sentiment increased more than expected in January. However, high inflation offset the benefits of the gain.
"Today’s data on personal spending showed a fairly good gain of 0.4%, but the gain was eaten up fully by higher prices," Tony Crescenzi, of Miller Tabak & Co., told MarketWatch.
Worries about the U.S. economy and Thursday’s losses spilled over into the overseas markets. Japan’s Nikkei Index dropped 2% - with a 322.49-point decline - to reach 13,603.02. Hong Kong’s blue-chip Hang Seng Index climbed 107.85 points to close at 24,591.69.
In Europe, the major indices all traded in the red with the Paris-based CAC40, London’s FTSE 100, Madrid’s IBEX 35 and the Frankfurt-based DAX posting losses.
News and Related Story Links:
- MarketWatch:
U.S. stocks slump; Dow slides more than 200 points
- MarketWatch:
Dell leads broad tech decline at market close
- Reuters:
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