- NEW YORK (CNN/Money) - The
Dow Jones industrial average plummeted Friday, losing almost 400 points
after component Johnson & Johnson said it is the latest company being
investigated by U.S. regulators for potential improper record keeping.
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- According to preliminary reports, the Dow fell 390.23
to 8,019.26, to its lowest level since January 1998. The Nasdaq composite
index lost 37.94 to 1,319.01. The Standard & Poor's 500 index lost
34.03 to 847.53.
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- The index has fallen more than 1,000 points in the past
two weeks and closed down nine of the last 10 sessions. Both the Nasdaq
and S&P are near their lowest levels since the first half of 1997.
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- "After rallying off the Sept. 21 lows, the market
consensus was that we would have to come back and retest those lows,"
said James Maguire, managing director at LaBranche & Co. "We're
in that process and whether we can hold [above the lows] or not remains
to be seen."
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- Dow component Johnson & Johnson (JNJ: down $7.88
to $41.85, Research, Estimates) said it is under investigation by the U.S.
Food and Drug Administration for allegations of improper record keeping
at a manufacturing plant that makes an anemia drug linked to serious illnesses
in Europe and Canada.
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- Sun Microsystems (SUNW: down $1.55 to $4.25, Research,
Estimates) ended a string of four straight money-losing quarters with a
modest 1-cent-a-share fiscal fourth-quarter profit. But the prosperity
may be short-lived; the maker of workstations and servers said it sees
a loss for the current quarter, indicating that spending on information
technology has failed to rebound. The stock was the Nasdaq's No. 1 most
active, losing more than 26 percent of its value Friday.
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- Credit Suisse First Boston downgraded Sun Microsystems
to "hold" from "buy."
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- Here's a look at market action late in the session. AOL
Time Warner, Microsoft fall
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- Microsoft (MSFT: down $1.55 to $49.56, Research, Estimates)
fell after lowering its earnings and revenue targets for fiscal 2003, which
began this month.
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- Merrill Lynch trimmed its earnings estimate by 2 cents
to $1.90 a share but raised its first-quarter estimate to 42 cents a share
from 39 cents. The firm maintained a "buy" rating on the stock.
-
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- Shares of AOL Time Warner (AOL: down $0.87 to $11.58,
Research, Estimates) fell after Chief Operating Officer Robert Pittman
quit the world's largest media company Thursday. Merrill Lynch commented
on the development, saying "given the dramatic deterioration in underlying
operating fundamentals at the AOL division, together with the rampant speculation
of divisional management change, we believe the timing and nature of the
announcement was appropriate."
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- The firm maintained a "buy" rating on the stock.
AOL Time Warner is the parent company of CNN/Money.
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- Dow component and drugmaker Merck (MRK: down $0.50 to
$41.50, Research, Estimates) managed to stave off the broader market's
losses after it reported a slight drop in second-quarter earnings that
met Wall Street estimates for the period. Looking forward, the company
said it expects to meet or top forecasts for the rest of the year. The
company's revenue accounting has come under scrutiny in recent weeks. Record
trade deficit
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- In economic news the Commerce Department said the U.S.
trade deficit widened to a record $37.6 billion in May from $36.1 billion
in April. Economists expected the deficit to fall to $35.3 billion, according
to Briefing.com.
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- The Labor Department said its consumer price index, which
measures retail prices paid by consumers, rose 0.1 percent in June after
being unchanged in May. That was in line with expectations of economists
surveyed by Briefing.com.
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- Asian-Pacific stocks took a beating Friday, with Tokyo's
Nikkei index down 2.8 percent. European markets tumbled at the finish on
Wall Street's woes and Swedish telecom gear maker Ericsson (ERICY: Research,
Estimates)'s wider-than-expected quarterly loss.
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- Treasury prices rose, sending the 10-year note yield
down to 4.56 percent. The dollar tested recent lows against the euro, which
traded above $1.01, and was down against the yen as well.
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- Light crude oil futures rose 21 cents to $27.87 a barrel
in New York, where gold soared $6.80 to $323.90.
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- Market breadth was negative. On the New York Stock Exchange,
losers beat winners by more than 4-to-1 as 1.71 billion shares changed
hands. On the Nasdaq, decliners beat advancers 12-to-5 as 2.01 billion
shares traded.
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