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Posted at 11:57 a.m., Tuesday, June 11, 2002

Drug, tech sectors drag down market

Hawai'i Stocks
Updated Market Chart

By Lisa Singhania
Associated Press

NEW YORK – A spate of disappointments in the pharmaceutical and biotech sectors triggered a broad selloff on Wall Street today, sending the Dow Jones industrials, Nasdaq composite and Standard & Poor's 500 indexes to their lowest levels of the year – and closer to the lows that followed the terrorist attacks.

The drop wiped out what had been a rally early in the session, the second such pullback in as many days. Analysts said the defeat showed again how risk-averse investors have become ­ although the corporate news today wasn't particularly bad, investors decided they were better off selling and locking in whatever profits they might have had.

"People are still scared to make a bet on the future at this point," said Rafael Tamargo, director of equity research at Wilmington Trust.

The Dow closed down 128.14, or 1.3 percent, at 9,517.26, according to preliminary calculations, after rising as much as 113 points earlier. The last time the Dow had a weaker finish was Nov. 5, when the blue chips stood at 9,441.03.

Broader stock indicators also retreated. The Nasdaq composite index fell 33.51, or 2.2 percent, to 1,497.18. The last time the Nasdaq closed lower was Oct. 2 when it stood at 1,492.33.

The S&P 500 index fell 17.14, or 1.7 percent, to 1,013.60. The last time the S&P closed lower was Sept. 26, when it stood at 1,007.04.

Abbott Laboratories plunged $7.37, or 16.1 percent, to $38.30 after the drug maker reduced its 2002 forecast because of a one-time charge of $140 million relating to a consent decree with the U.S. Food and Drug Administration concerning quality control problems at one of its plants.

Sales of an anti-obesity drug haven't been as high as hoped either.

GlaxoSmithKline fell $1.89 to $39.12 on published reports that litigation might be necessary to resolve a tax dispute with the Internal Revenue Service.

And Merck tumbled $2.42 to $51.88 after reaffirming its outlook for the quarter and year, but announcing it would wait until next year to submit a new application for an arthritis drug that it had withdrawn in March.

Biotechs also struggled, including Idec, which fell $6.34 to $32.03 on news that Medicare won't start covering Zevalin, its cancer drug, until October.

The selling spread to the technology sector.

Chipmaker Intel fell 85 cents to $20.22, while optical networking company Ciena tumbled 35 cents to $4.62.

Analysts say the market's inability to hold any gains reflects the considerable doubt and uncertainty on Wall Street.

After two years of losses, many investors were already inclined to stay away. The combination of sluggish earnings, corporate bookkeeping scandals and terrorism fears has given them even more reasons to do so.

Today's pullback coincided with another suicide bombing in Israel.

"Right now we're scrambling to come up with some good reasons to buy stocks," said Bob Dickey, managing director of technical analysis at RBC Dain Rauscher.

"It's a wait-and-see market. Even though there's talk that second-quarter reports will improve, a lot of people are going to wait even longer to buy stocks to make sure that things aren't going to get worse."

Among gainers, mobile phone maker Nokia rose 55 cents to $12.55 after it reduced its revenue outlook for the second quarter but said it will still meet earnings targets.

Investors also bid Nextel Communications higher after the wireless communications company said business was improving and that it expected to meet its 2002 forecast.

The stock rose 63 cents to $4.42.

Declining issues led advancers 3 to 2 on the New York Stock Exchange.

The Russell 2000 index fell 6.52 to 462.77. Volume was moderate.

Japan's Nikkei stock average rose 0.7 percent. Germany's DAX index increased 0.4 percent, Britain's FTSE 100 gained 0.1 percent, and France's CAC-40 advanced 2.1 percent.