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Archive for Wednesday, July 25, 2001

Dow plunges on earnings news

Second-quarter losses, bleak outlook again strike Wall Street

July 25, 2001

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— Stock prices dropped sharply Tuesday with the Dow industrials tumbling by triple digits for a second day on a spate of bad news a wider-than-expected loss from Lucent Technologies, lower profits from Exxon Mobil and revenue warnings from Amazon.com and AT&T.

"Pretty much all of corporate America has said the same thing: Second quarter was bad and we don't know what to say about the future," said Arthur Hogan, chief market analyst at Jefferies & Co.

The Dow Jones industrial average finished the day down 183.30, or 1.8 percent, at 10,241.12, compounding Monday's 152-point loss.

Investors have been unable to justify buying stocks while most companies say business isn't improving. A long list of firms have warned of shrinking profits and slumping sales, and others have said they cannot make accurate projections amid uncertainty about the economy.

"No one feels they are going to miss a raging bull market if they wait another few weeks for signs of a recovery," Hogan said.

Among Tuesday's losers were companies whose earnings disappointed Wall Street. Lucent slid nearly 19 percent, down $1.47 at $6.43, after announcing it lost 35 cents a share in its fiscal third quarter, wider than the 21 cents analysts expected.

Dow industrial Exxon Mobil fell $1.53 at $40.97 on earnings that missed Wall Street's expectations by 2 cents a share.

While past earnings are important, analysts say investors are more concerned with what companies have to say about the future the market's real weak spot.

A bleak outlook from Amazon caused the Internet retailer to plunge nearly 25 percent, down $3.97 at $12.06.

Losses were sizable and spread across an array of sectors Tuesday. About half of the Dow's 30 stocks lost more than $1. There were few gainers, another sign that investors believe the economy has hurt most businesses.

Among the advancers was McDonald's, which issued bullish statements about growth for the remainder of the year and rose 62 cents to $28.39. Honeywell, which surpassed earnings estimates by 2 cents a share, inched up 4 cents to $36.21.

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