- NEW YORK (Reuters)
- Major U.S. stock gauges slammed to lows unseen since 1997 on Wednesday
after Qwest Communications International Inc. inflamed worries over corporate
accounting and Standard & Poor's booted a handful of companies from
its prestigious index.
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- "There are no buyers and that's a proxy for a major
lack of confidence in U.S. companies," said Gary Wedbush, head of
trading at Wedbush Morgan Securities.
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- Wall Street has suffered three straight days of deep
declines. The market has been on a mostly downward spiral as blow-ups like
WorldCom Inc.'s $3.85 billion accounting scandal, fears of another terror
attack on the United States and apprehension over the upcoming quarterly
earnings season rattle the market.
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- Qwest lost almost one-third of its value after federal
prosecutors launched an unspecified criminal probe into the No. 4 U.S.
local phone company. The latest in a string of high-profile investigations
into Corporate America dealt another stinging blow to investor confidence.
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- Royal Dutch slumped nearly 10 percent after the Anglo-Dutch
oil group and six other foreign firms were yanked from the S&P 500
index to be replaced with seven U.S. companies. Money managers dumped the
foreign shares to make room for the new members of the benchmark index.
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- Selling intensified as the closing bell approached. The
S&P 500 skidded 32.36 points, or 3.40 percent, to 920.47, based on
the latest available numbers, hitting its lowest level since October 1997.
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- The blue-chip Dow Jones industrial average tumbled 282.59
points, or 3.11 percent, to 8,813.50 -- its largest one-day percentage
loss since September 2001. The technology-loaded Nasdaq Composite index
sank 35.11 points, or 2.54 percent, to 1,346.01, ending at its lowest level
since May 1997.
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- "The mood is relatively sullen," said Jack
Schwetje, a senior equities trader at Deutsche Bank. "All the up moves
have been sold. It hasn't made much sense to get involved over the last
couple of weeks."
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- Losers trounced winners by a ratio of about 3 to 1 on
the New York Stock Exchange and about 2 to 1 on Nasdaq. More than 1.78
billion shares changed hands on the Big Board and more than 1.79 billion
on Nasdaq in active trading.
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- The market has suffered a staggering loss of nearly $7
trillion since hitting an all-time high on March 24, 2000 -- reflecting
a 40 percent tumble in the Wilshire Total Market Index. The total U.S.
stock market is now valued at about $10.4 trillion.
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- Yahoo! Inc. emerged as a bright spot after a dismal session
by snapping a string of six consecutive quarterly losses. The Internet
media company after the bell posted a second-quarter profit and higher
revenues, with the help of new fees on services. Yahoo ticked up to $12.54
in after-hours trade after ending down 51 cents at $12.19.
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- During regular hours, Qwest tumbled 83 cents to $1.77.
Qwest, the dominant local phone company in 14 states from Minnesota to
Washington, said it was not told the subject of the criminal probe by the
U.S. Attorney's office in Denver. A Qwest spokesman declined to comment
on whether investigators have asked the company for any documents.
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- Stock-market index compiler S&P sent seven foreign
companies reeling after saying it would yank them from its S&P 500
index to create a U.S.-based benchmark. Royal Dutch fell $5.16 to $50.73.
Consumer products giant Unilever lost $4.15 to $60.97. Canadian firms Nortel
Networks, Alcan, Barrick Gold, Placer Dome and Inco also slumped on news
of their impending exit.
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- S&P said it would replace the foreign companies with
seven U.S. firms, including United Parcel Service ; Electronic Arts Inc.
; Ebay Inc. ; Goldman Sachs Group Inc. ; Prudential Financial Inc. ; Principal
Financial Group Inc. ; and SunGard Data Systems Inc. . All those stocks
rose.
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- Accounting concerns spread to the White House. A public
interest group sued Vice President Dick Cheney and the oil services company
he once ran, Halliburton Co., alleging they defrauded shareholders by overstating
the company's revenues. Halliburton shares fell 57 cents to $13.55.
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- The civil lawsuit was filed in federal court one day
after President Bush went to Wall Street to outline proposals aimed at
stopping the accounting scandals that have shaken investor faith in U.S.
financial markets.
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- Auto makers added more pressure to the market. General
Motors Corp., the world's largest auto maker and a Dow component, lost
$3.53 to $47.61, and rival Ford Motor Co. dropped $1.12 to $13.99. Banc
of America cut the car giants to "market perform" from "buy"
due to concerns over competitive industry pricing.
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- Pharmaceutical giant Merck & Co. slumped $2.18 to
$43.57. The Dow component delayed the $980 million public sale of its Medco
Health Solutions Inc. pharmacy unit for a third time, as turbulent markets
sapped investor demand for new shares.
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- Cisco Systems Inc., up 37 cents at $13.51, emerged as
a bright spot in a solemn market. Merrill Lynch raised the rating on the
Web gear giant to "strong buy" from "buy," saying it
expected an imminent turnaround in the network equipment sector.
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