Stocks continue to slide
By Amy Baldwin
Associated Press
NEW YORK — Stocks tumbled yet again yesterday, closing out another dismal week and extending a nearly three-month slide that has cut 10 percent or more from the market's major indexes and has left some closing in on their post-Sept. 11 lows.
The Dow ended the week off 3.4 percent, the Nasdaq tumbled nearly 5.0 percent and the S&P fell 3.7 percent.
The Nasdaq composite index is just 112 points, or almost 8 percent, away from its Sept. 21 low of 1,423.19. The Standard & Poor's 500 index stands 61 points, or 6.4 percent, above its low of 965.80. The Dow Jones industrials is holding up the best, up 1,353, or 16.4 percent, from its low of 8,235.81.
"There is just no motivation for people to pull their wallets out of their pocket, and say, 'Let's spend some money on stocks,"' said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky. "There are a lot of things to worry about."
The recent drops are even more worrisome to some investors than the precipitous drop that followed the terrorist attacks last September.
Then, the Dow fell 1,369 points in a week — but stocks came back rather quickly. The Dow recouped its losses in seven weeks. The Nasdaq, which fell 272 the week after the attacks, and Standard & Poor's, which dropped 126, retraced their losses after three weeks.
What's changed since then is that the market's problems are more chronic — dismal earnings, probes in corporate bookkeeping after Enron's collapse and shattered investor confidence. Tensions overseas, between India and Pakistan and in the Middle East, also have given investors little reason to take chances on stocks.
"What the market is experiencing is a barrage of negative news. ... We have a lot of problems out there, and what we need is a catalyst to change the mood of the depressed investor," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
But a string of negative factors is proving to be much harder for the market to overcome than an unforeseen, catastrophic event.
The market had been looking for an economic turnaround or profits rebound to lift it higher. But with an economic recovery that has been slower than investors anticipated, and with earnings still yet to improve, stocks continue to languish.
"The thinking is that, yeah, the economy is recovering, but you have all these other things to worry about," Dickson said.
Analysts say Wall Street's biggest problem is the fact that earnings have not rebounded, and might not do so by year's end as investors had hoped. Corporate outlooks have improved little, and some remain bleak.
Intel said last week that second-quarter revenues would miss targets, raising fears among investors that more companies will warn of lower profits and sales this month.
"People are concerned about paying for stock without knowing what earnings will be. At this point, we are getting into the (earnings) preannouncements for the second quarter, and that has people on edge too," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
"The market has been struggling, because the market is really earnings driven. People pay for stocks ultimately based on the earnings power of companies."
