- NEW YORK (Reuters)
- Stocks sank on Friday, tossing major gauges down more than 2 percent,
as Wall Street's fears of a faltering economy mounted after the nation
generated a paltry number of new jobs in July and factory orders sank in
June.
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- "We have seen some evidence things are not going
quite as well as we had hoped," said Jay Mueller, a portfolio manager
at Strong Capital Management, which oversees $40 billion. "The recovery
is looking a little more sluggish now -- part of that is driven by the
dreadful performance of the stock market. Bad begets bad."
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- The economy generated a scant 6,000 new jobs in July
and orders for U.S. factory goods fell in June at their steepest pace in
seven months, according to the government. The soft numbers took another
bite out of hopes for a solid economic rebound after earlier reports this
week showed weak growth and souring consumer sentiment.
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- Investors fled to safe-haven government bonds, ditching
stocks after a run-up earlier this week. Yields on two-year U.S. Treasury
notes dived to record lows, falling below 2 percent for the first time
ever. As stocks skidded and bonds rallied, speculation grew that the Federal
Reserve might cut interest rates yet again.
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- Investment bank Goldman Sachs predicted the central bank
would chop an additional 75 basis points from the 1.75 percent benchmark
fed funds rate by year-end. Fed funds are already at 40-year lows after
a string of 11 rate cuts last year.
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- The blue-chip Dow Jones industrial average .DJI tumbled
193.49 points, or 2.27 percent, to 8,313.13, according to the latest available
data. The broader Standard & Poor's 500 Index .SPX dropped 20.42 points,
or 2.31 percent, to 864.24. The technology-laced Nasdaq Composite Index
.IXIC fell 32.08 points, or 2.51 percent, to 1,247.92.
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- "It's the fear of a double-dip recession,"
said Arnie Owen, managing director of capital markets at Roth Capital Partners,
referring to two periods of recession separated by a brief economic upturn.
"The underlying word there is fear as opposed to reality. Things will
get clearer when we enter the fourth quarter in September. You will have
more visibility about the balance of this year and the beginning of next
year."
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- Entertainment giant Walt Disney Co. DIS.N skidded 9 percent
after a steep drop in quarterly earnings and a weak outlook. A report of
an expanded federal probe into AOL Time Warner Inc. AOL.N helped lop 9
percent off the media titan's shares.
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- Declining stocks eclipsed winners by a ratio of 8 to
3 on the New York Stock Exchange and more than 2 to 1 on Nasdaq. Trading
was brisk with more than 1.53 billion shares changing hands on the Big
Board and more than 1.41 billion on Nasdaq.
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- The market enjoyed a monster rally on Monday when the
Dow raked in its third-largest point gain ever. That run-up had sparked
hopes the market was poised for an upturn, but a two-day selloff at the
end of the week eroded those gains.
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- For the week, the Dow edged up almost 0.6 percent, the
Nasdaq lost 1.1 percent and the S&P 500 gained 1.3 percent. The Nasdaq
has fallen five weeks in a row.
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- Walt Disney ranked as the largest percentage loser in
the Dow, spiraling down $1.52 to $15.31. Earlier, the shares hit a nearly
eight-year low. The entertainment giant posted weak results from slack
theme park attendance and warned of worse conditions ahead. Debt rating
agency Standard & Poor's weighed in, saying it may cut Disney's long-term
corporate credit rating.
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- National Semiconductor Corp. NSM.N lost 25 cents to $16.88.
The company cut its fiscal first-quarter revenue forecast, warning that
revenues will remain flat in the fourth quarter due to a weak personal
computer market.
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- Morgan Stanley cut its 2003 revenue growth forecast for
the semiconductor industry to a range of 15 percent to 20 percent from
20 percent to 25 percent, citing the risks of a weakening global economy
during the second half of 2002.
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- The call arrived on the back of news that European semiconductor
sales fell 4 percent in June compared with May, as overall chip sales around
the globe were flat, month-to-month, according to the U.S.-based Semiconductor
Industry Association.
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- The Philadelphia Stock Exchange's semiconductor index
.SOXX fell 3.36 percent. Intel Corp. INTC.O , the world's largest maker
of computer chips, dropped 85 cents to $16.71. Texas Instruments Inc. TXN.N
, the leading maker of chips used in cell phones, fell $1.14 to $19.97.
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- Web gear giant Cisco Systems Inc. CSCO.O lost 21 cents
to $11.89 and ranked as the most active stock on Nasdaq as rumors swirled
about the possible departure of Cisco's chief financial officer. Cisco
denied the rumors, repeating that CFO Larry Carter, who is turning 60,
has always said he will retire "at some time in the future" and
at that time there will be "a smooth and well-planned transition."
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- Accounting issues were not far from investors' thoughts,
after a string of Wall Street scandals that have shattered investor confidence.
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- AOL Time Warner fell $1.07 to $10.25, after the Washington
Post reported the U.S. Securities and Exchange Commission investigation
of AOL has expanded to include a probe of the company's former business
relationship with software firm PurchasePro Inc.
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- The government reported U.S. payrolls grew by just 6,000
in July, well below economists' average expectations for a 69,000-job increase,
while the unemployment rate held steady at 5.9 percent.
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- To make matters worse, the government later reported
that U.S. manufactured goods sank in June at the sharpest rate in seven
months, highlighting a trend of weak demand for capital equipment such
as machinery and computers.
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- Earlier this week, the government said U.S. gross domestic
product shrank for three straight quarters at the beginning of 2001 and
grew less strongly than thought at the start of this year.
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