- NEW YORK (Reuters) - Talk of a possible war with Iraq,
dim profit forecasts and disappointment that the U.S. Federal Reserve left
interest rates unchanged sent stocks reeling on Tuesday, driving the blue-chip
Dow average to its lowest close in four years.
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- "There hasn't been a whole lot of good news,"
said Philip Dow, director of equity strategy at RBC Dain Rauscher. "After
2 1/2 years of everything you buy going down, people are having second
thoughts about getting invested for the future."
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- The central bank left rates at current 40-year lows after
last year's string of 11 rate cuts. The Fed also warned the world's richest
economy was at risk of further weakness, particularly amid "heightened
geopolitical" tensions.
-
- Worries about the cost and duration of an attack on Iraq
were fanned after British Prime Minister Tony Blair said Iraq had the means
to launch a weapon of mass destruction at 45 minutes' notice.
-
- Adding to the market's woes, companies, including Maytag
Corp., MYG.N the No. 3 U.S. appliance maker, and forest products giant
Weyerhaeuser Co. WY.N became the latest industry leaders to warn profits
would miss forecasts.
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- "We are in a very strong bear market. Of course
there will be a bottom, but that level may be a lot lower than we thought,"
said Rick Meckler, president of investment firm LibertyView, which oversees
about $1 billion.
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- The Dow Jones industrial average .DJI slumped 189.02
points, or 2.4 percent, to 7,683.13, according to the latest data. It was
the lowest close since Oct. 1, 1998, when the Dow average ended at 7,632.53.
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- The broader Standard & Poor's 500 Index .SPX was
down 14.43 points, or 1.73 percent, at 819.27 and the technology-laced
Nasdaq Composite Index .IXIC was down 2.79 points, or 0.24 percent, at
1,182.14.
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- On Monday, the Nasdaq closed below 1,200 for the first
time since September 1996.
-
- Market breadth was negative, with about 11 stocks falling
for every 5 that gained on the New York Stock Exchange and about 7 stocks
dropping for every 4 that advanced on the Nasdaq.
-
- Trading volume was active, with 1.7 billion shares traded
on the NYSE and 1.66 billion traded on Nasdaq.
-
- The U.S. central bank's Federal Open Market Committee
said it would maintain its federal funds rate charged on overnight loans
between banks at 1.75 percent. The decision disappointed some investors,
who had hoped the Fed might cut rates to underpin the economy.
-
- "Some people were talking about the possibility
of a rate cut and some are disappointed," said Jack Caffrey, equity
strategist for JP Morgan Private Bank, which oversees $280 billion. "But
continuing slow growth in the economy, concerns about earnings for next
year, and how comfortable we are with those earnings are still the big
issues for investors."
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- Maytag tumbled $1.22, or 5 percent, to $23.10 after becoming
the latest maker of big-ticket household items to warn profits will miss
expectations as the economy has waned.
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- Weyerhaeuser Co. WY.N lost $5.94, or 12 percent, to $43.79
after the company said third-quarter profits would fall well short of forecasts,
hurt by low wood prices and duties on imports of Canadian softwood lumber.
The company has a large presence in Canada.
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- Electronic Data Systems Corp. EDS.N sank $4.84, or 29
percent, to $11.68 and ranked as the second-largest percentage loser on
the Big Board after Merrill Lynch cut its investment rating on the computer
services company to "sell" from "neutral." EDS lost
more than half its value last week after warning profits would miss forecasts.
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- Office equipment maker Xerox Corp. XRX.N fell 71 cents,
or 11 percent, to $5.96 after the company said the U.S. attorney's office
in Bridgeport, Connecticut, is investigating its past accounting practices.
Xerox had paid $10 million to the Securities and Exchange Commission five
months ago to settle charges it manipulated its financial results.
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- El Paso Corp. EP.N sank $2.21, or 29 percent, to $5.30,
making it the biggest percentage loser on the NYSE, after JP Morgan and
Goldman Sachs cut their investment rating on the energy company to "market
performer" and "market perform," respectively, after a regulatory
ruling that the largest U.S. natural gas pipeline had withheld supply in
California.
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- The market got a fleeting boost in the morning from a
report showing consumer confidence fell less than expected in September.
But the spot of bright news did not dispel deep-seated concerns over the
economy and war that have driven the market to four straight weeks of declines.
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- The Conference Board, a private business research group
said its index of consumer attitudes fell to 93.3 in September -- its lowest
since November 2001 -- from a revised 94.5 in August. Still, the drop was
less than analysts' forecasts for the index to fall to 92.3. The index
is down 17 points from a recent peak of 110.7 in March.
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