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The Honolulu Advertiser

Posted at 11:20 a.m., Tuesday, September 3, 2002

Stocks plunge on disappointing economic report

Hawai'i Stocks
Updated Market Chart

By Hope Yen
Associated Press

NEW YORK – The Dow tumbled more than 350 points Tuesday on disappointing news that included lower-than-expected manufacturing activity and a Wall Street downgrade of Citigroup and Ford Motor Co.

"We're back to work from a not-so-good August," said Arthur Hogan, chief market analyst at Jefferies & Co. "We came in with a couple of downgrades and just a general sense the economy hasn't picked up the way we would like to see it."

The Dow Jones industrial average closed down 355.45, or 4.1 percent, at 8,308.05, according to preliminary calculations. It was the largest one-day loss since July 19, when the Dow dropped 390.23, and it came after a 2.4 percent decline last week broke a five-week winning streak.

The broader market also finished sharply lower. The Nasdaq composite index declined 51.01, or 3.9 percent, to 1,263.84, after falling 4.8 percent in the previous week to end three weeks of gains.

The Standard & Poor's 500 index fell 38.05, or 4.2 percent, to 878.02.

The Institute for Supply Management said its index of business activity remained steady at 50.5 in August, below analysts' expectations of 51.8. An index above 50 signifies growth.

Analysts say investors were intently watching the release of several economic reports this week for evidence that the recovery is continuing.

Next week's anniversary of the Sept. 11 attacks and concerns about a possible war with Iraq are also prompting some investors to lock in profits now, analysts said.

"It's a series of smaller things looming up in the face of 9-11 and the fact that September is historically the worst month of the market. It's getting us off to a lousy beginning," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.

Intel dropped 81 cents to $15.86 after Lehman Brothers reduced the computer company's third-quarter revenue forecast. Ford dropped 83 cents to $10.94, and Citigroup declined $3.36 to $29.39, both on ratings downgrades.

IBM fell $3.03 to $72.35, on a Wall Street Journal report that the company may have to cut 4,000 jobs once it completes its acquisition of PricewaterhouseCoopers' consulting arm.

Declining issues outnumbered advancers more than 4-to-1 on the New York Stock Exchange. Volume was light.