Archive for Tuesday, July 24, 2001

Stocks fall as investors lack reason to buy

July 24, 2001


— The stock market fell sharply Monday as skittish investors sized up more second-quarter earnings and braced for the likelihood that the economic slowdown will mean another spate of profit warnings.

Yet there were no major earnings disappointments that drove prices downward, a sign that investors see little reason to buy stocks.

"There's absolutely no urgency," said Scott Bleier, chief investment strategist for Prime Charter Ltd. "The frustration level in the marketplace is extreme."

The Dow Jones industrial average finished the day down 152.23, or 1.4 percent, at 10,424.42. The Nasdaq composite index fell 40.81, or 2 percent, to 1,988.56 and the Standard & Poor's 500 index declining 19.82, or 1.6 percent, to 1,191.03.

Hopes that earnings and the economy would improve by year end have dimmed in recent weeks. More than 800 companies have warned of shrinking profits and others consider business so uncertain that they can't make accurate projections.

"We are all starved for pieces of good information to make us feel better, but that information is just not there yet," said Charles White, portfolio manager for Avatar Associates.

Analysts say that the market still could trend higher in the fourth quarter, when companies' profits will look better when compared with the weakened results of the last three months of 2000.

Among Monday's biggest losers were companies that warned of tough business ahead. Lexmark International, which beat second-quarter expectations but reduced its forecast for the third quarter, slid nearly 15 percent, down $9.14 at $49.51. Goodyear Tire, which met expectations but said production must be curtailed, fell $1.80 to $29.84.

Dow industrial 3M stumbled $1.68 to $111.32 to beat expectations but warned that slower growth abroad and a strong dollar would hurt results for the rest of 2001.

Wall Street's losses reached across most sectors, a sign that investors doubt that any business is capable of doing well in the slowing economy. Microsoft sank $2.09 to $67.09, General Electric tumbled $1.33 to $45.30 and Wal-Mart fell $1.25 to $53.03. All three are Dow components.

Only three Dow stocks moved higher. American Express, which met earnings forecasts, inched up 15 cents to $38.13, while McDonald's, which was upgraded by Merrill Lynch, rose 25 cents to $27.77 and IBM advanced 15 cents to $105.85.

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