Posted at 10:51 a.m., Thursday, May 9, 2002
Wal-Mart report shakes confidence in stocks
By Josh P. Hamilton
The Standard & Poor's 500 Index fell 15.84, or 1.5 percent, to 1073.01, led by Microsoft Corp. and General Electric Co. Wal-Mart, the world's biggest company by sales, contributed 9 percent of the retreat. The Dow Jones Industrial Average slid 104.41, or 1 percent, to 10,037.42. The Nasdaq Composite Index dropped 45.80, or 2.7 percent, to 1650.49.
Computer-related shares accounted for about one third of the decline in the S&P 500, which pared yesterday's 3.8 percent gain, the largest advance since Sept. 24. The U.S. stock benchmark has lost 6.5 percent this year.
Trading of 1.16 billion shares on the New York Stock Exchange was below yesterday's level. More than three stocks fell for every two that rose on the Big Board, while two declined for every one that advanced on the Nasdaq Stock Market.
The retail sales report suggesting consumer spending may be slowing helped stoke concerns stocks are too expensive. Consumers account for two-thirds of the economy. The S&P trades at about 21 times forecast earnings, compared with a historical level of 15. Some investors said that leaves little room for further gains.
"I don't think (the declines are) over for the Dow or S&P 500," said Robert Bloom, president of LF Capital Partners, which oversees $1 billion.
First-quarter earnings for companies in the S&P 500 fell 12.9 percent, double previous forecasts, in their fifth straight drop, according to Thomson First Call. Analysts are trimming estimates of projected growth for the rest of the year.
State unemployment offices received 411,000 new applications for benefits last week, down 11,000 from the week before, the Labor Department reported. While the decrease was the third straight, claims exceeded 400,000 for a seventh week.