- NEW YORK (Reuters) - Stocks
sank on Monday, with the blue-chip Dow average chalking up a low unseen
since October 1998, as investors buckled under rampant worries over corporate
scandals and tepid earnings.
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- "Psychology has taken over here," said Phil
Orlando, chief investment officer of Value Line Asset Management, which
oversees $6 billion. "The pendulum has swung far to the side of concern
based on the crisis of confidence."
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- >From its all-time closing high in March 2000, the
broad Standard & Poor's 500 Index .SPX is down more than 46 percent,
nearing the decline of more than 48 percent during the 1973-74 bear market.
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- In heavy trading, the market endured a see-saw session
after last week's frenzied selloff. Some experts said the time is nearing
for the fast-sinking market to hit bottom as shares fall to their lowest
levels in five years, but others were not so sure. Some bargain hunting
briefly lifted blue-chip stocks above water on Monday.
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- "Some people nibbled on what they thought were cheap
stocks but that did not last," said Kevin Cohen, senior trader at
Wedbush Morgan. "We need this flushing out to find the bottom ...
But people are thinking why buy it today when you can buy it cheaper tomorrow."
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- The Dow Jones Industrial average .DJI sank 234.68 points,
or 2.93 percent, to 7,784.50, according to the latest available data. It
was the blue-chip index's first close under the 8,000 level since mid-October
1998.
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- The Dow was pushed lower by Citigroup Inc. C.N , the
No. 1 U.S. financial service firm, which fell 11 percent. Citigroup was
among the leading lenders to phone company WorldCom WCOME.O , which filed
for the largest bankruptcy ever on Sunday, and collapsed energy trader
Enron Corp. ENRNQ.PK .
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- The tech-laced Nasdaq Composite Index .IXIC was down
36.50 points, or 2.77 percent, at 1,282.65, sinking through the 1,300-point
psychological barrier. The S&P 500 lost 27.91 points, or 3.29 percent,
to 819.85, lows unseen since May 1997.
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- BellSouth Corp. BLS.N , the nation's No. 3 local phone
company, sank 18 percent after it released a grim earnings report. American
Express Co. AXP.N fell more than 8 percent after handing in a good scorecard
but a cautious outlook.
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- About five stocks fell for each one that rose on the
New York Stock Exchange, where more than 2.1 billion shares traded. The
Big Board saw one of its busiest days ever on Friday when investors fled
the market.
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- Some $1.5 trillion in investor wealth has evaporated
from the stock market since July 4, based on the Wilshire 5000 Total Market
Index .TMW .
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- "It's a pitiful market ... It's an emotional market
that is selling on fear," said Brian Pears, head of equity trading
at Victory Capital Management. "It's fear that there is something
drastically wrong and if I hold on, my portfolio will collapse. It is fed
by these daily declines of 2 to 4 percent. It's irrational."
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- WorldCom rose 5 cents, or 55.5 percent, to 14 cents after
its long-expected bankruptcy filing. WorldCom filed the world's largest
corporate bankruptcy on Sunday as the long-distance telephone and data
services company buckled under a $3.85 billion accounting scandal and a
mountain of junk-rated debt.
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- BellSouth sank $5 to $22.61 after posting lower profits
and cutting its forecast for full-year results yet again. The bad news
dragged down the entire telecoms sector. Shares of fellow Baby Bells SBC
Communications Inc. SBC.N , off $2.72 to $23.96, and Verizon Communications
VZ.N , down $3.85 to $28.65, both fell to six-year lows.
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- "It's the same old things we've been seeing over
the last few weeks: there are still mutual fund redemptions and fear of
bad earnings coming out this week," said Thomas Garcia, who helps
manage $2.5 billion equities at Thornburg Investment Management Co.
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- American Express, a Dow issue, fell $2.68 at $28.97.
It said quarterly profits more than tripled, as low interest rates reduced
borrowing costs. But its results included a $78 million pretax loss for
its exposure to WorldCom. American Express also said it did not expect
2002 earnings to exceed Wall Street estimates.
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- Citigroup, whose Citibank unit is owed $155 million by
WorldCom, fell $3.96 to $32.04 and ranked as the most active on the New
York Stock Exchange. Compounding matters was a Washington Post report,
citing unnamed sources, that said Citigroup and other banks helped conceal
bankrupt energy trader Enron Corp.'s ENRNQ.PK loans. A Citigroup spokeswoman
was not immediately available for comment.
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- The financial giant was dealt another blow by a report
in The Wall Street Journal that Jack Grubman, the star telecom analyst
for Citigroup's Salomon Smith Barney unit, is being investigated by the
National Association of Securities Dealers for his stock picks.
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- Dow stock ExxonMobil Corp. XOM.N , the oil giant, lost
$2.13 at $30.27. U.S. crude oil futures plunged 4.4 percent, with Wall
Street volatility pressuring oil markets as traders unwound positions before
the expiry of the August contract.
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