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Posted at 11:34 a.m., Wednesday, September 10, 2003

Terror concerns, poor tech outlook hit stocks

Hawai'i Stocks
Updated Market Chart

By Amy Baldwin
Associated Press

NEW YORK — New worries about terrorism and another disappointing tech outlook sent stocks falling sharply for a second straight session today, with technology stocks and the Nasdaq composite index bearing the brunt of the selling.

Wall Street’s concerns about terrorism resurfaced with the broadcast of a videotape purportedly of Osama bin Laden; the broadcast, on the Arabic satellite channel Al-Jazeera, came one day before the second anniversary of the Sept. 11, 2001, terror attacks.

Meanwhile, Texas Instrument Inc. lowered its third-quarter revenue estimate just a day after a disappointing revenue outlook from Nokia Corp. prompted investors to turn cautious and lock in some gains from the market’s recent advance. Still, Wall Street had room to pull back after seeing its major stock gauges climb for four weeks running.

"The market was ripe for a selloff. Obviously, Texas Instruments is helping that selloff to accelerate," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "But I don’t think it is the beginning of significant pullback. I just think it is a little drop here."

The tech-dominated Nasdaq composite index closed down 49.55, or 2.6 percent, at 1,823.88, according to preliminary calculations. The last time the Nasdaq had a bigger one-day point loss was nearly two months ago, on July 17 when it forfeited 49.95. On Tuesday, the Nasdaq shed 15.19.

The market’s other major gauges also retreated. The Dow Jones industrial average fell 86.74, or 0.9 percent, to 9,420.46, following the previous session’s loss of 79.09. The Standard & Poor’s 500 index fell 12.24, or 1.2 percent, to 1,010.93, after losing 8.47 yesterday.

Wall Street was jittery ahead of the second anniversary of the Sept. 11 attacks. That tension intensified this afternoon after Al-Jazeera aired footage of bin Laden and his deputy, which the broadcaster said was made in late April or early May. An accompanying audiotape attributed to the deputy, Ayman al-Zawahri, summoned Iraq guerillas to "bury" U.S. troops in Iraq.

The nervousness prompted investors to cash in profits. Stocks been rallying for the last month on better-than-expected second-quarter earnings and surprisingly strong economic data, boosting investors hopes about the second half of 2003.

Many analysts say a further retreat can be expected. Wall Street faces some hurdles, including rising interest rates and a jobless economic recovery, that threaten its upward momentum.

Disappointing high-tech earnings forecasts contributed to today’s decline.

Texas Instruments fell $1.90 to $23.42 after shaving a penny off the high-end and low-end of its third-quarter earnings estimate. Nokia, meanwhile, fell 59 cents to $15.39 the day after its downbeat revenue outlook inspired investors to collect some profits. Today, UBS Warburg cut its rating on the cell phone maker to "neutral" from "buy."

The market "has had such a strong run that (stocks) are pulling back. It really did start with Nokia," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.