New York — A murky forecast from Intel sent stocks sharply lower Wednesday on worries that a recovery would take longer than expected and that the market had risen too high, too fast.
The Dow Jones industrials tumbled more than 200 points to their weakest finish in 1 1/2 months with selling that spread across the market and intensified late in the session. Analysts said investors were collecting profits rather than risk a loss if an economic turnaround is delayed.
"It's the combination of an uncertain outlook and the relatively high stock valuations out there right now," said Matt Brown, head of equity management at Wilmington Trust. "If the market were dirt cheap, investors might be more comfortable taking risks."
The Dow closed down 211.88, or 2.1 percent, at 9,712.27, its lowest close since Nov. 28, when the index was at 9,711.86. The loss was the biggest point drop since Oct. 29, when the index fell 275.
With the onset of fourth-quarter earnings season, investors have become cautious again, reluctant to extend themselves too much in a market that many analysts say reflects expensive, rather than realistic, short-term expectations.
Wednesday's downturn was prompted by Intel, which reported fourth-quarter results better than estimates but which also indicated it was too early to tell if an economic recovery has started.
The news upset investors who had sent the sector higher on anticipation that it was about to turn around and would resume the strong growth of the late 1990s. The hope was that Intel would be the first of many tech firms to indicate business was improving.
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