AnonymousFear grips Wall StreetSat Apr 16, 2005 17:32220.127.116.11
Fear grips Wall Street
Worst slide for Dow in more than 2 yrs.
By TOM VAN RIPER
DAILY NEWS WRITER
Stocks fell off a cliff yesterday, with the Dow ending its worst-three day plunge in over two-and-a-half years.
The Dow fell 191.24 to 10,087.51, led by disappointing profits from IBM.
"Investors are nervous about economic growth right now," said Steve Neimeth, a money manager at AIG SunAmerica, noting that the March slowdown combined with rising interest rates makes for tough going on Wall Street.
The blue-chip index has lost 427 points over the past three days. The Nasdaq lost 38.56 yesterday to 1,908.15, extending its three-day slide to 97 points, the most since last April.
About half a trillion dollars in market value has been wiped out since Wednesday, according to research from Lehman Brothers.
"Most felt the market wasn't trading at enough of a discount for this environment," Neimeth said.
IBM led blue-chips' free fall yesterday, plummeting $6.94, or 8%, to a two-year low of $76.70. The computer company disappointed analysts with a 3% quarterly profit hike from last year, way below estimates.
IBM's woes hit shares of other big tech firms. Hewlett-Packard dropped 91 cents to $20.84, while Apple tumbled $1.91 to $35.35.
Downbeat economic news for March came hard and fast yesterday. Output at the nation's factories dipped for the first time in six months, according to the Fed, as high energy prices had makers of autos and electronics cutting back.
Also, the Labor Department said import prices rose 1.8%, the biggest jump in over two years, driven almost exclusively by energy prices. Economists keep a close eye on the price of imports - now 7% higher than a year ago - since they can trigger inflation by reducing pressure on domestic companies to keep prices low.
Manufacturing in New York state increased at the slowest pace in two years. The Empire State Manufacturing Survey, which gives a clue to the current performance of industry, slumped to 3.1 this month, the lowest since the index showed contraction in April 2003, from 20.2 last month.
"It's quite a rash of news, which makes you wonder if the economy is really slowing that much or if it's a lot of noise," said James Glassman of J.P. Morgan Chase. "How can the economy be that different in one week?"
He thinks it's possible the negative trend will reverse in April, a month that's seen crude prices retreat to six-week lows after an 8% spike in March. Otherwise, he said, look for the Fed to take a pause in its steady series of rate hikes.
For now, people aren't treating March as a fluke.
Consumer sentiment dropped to its lowest reading since Sept. 2003, according to the latest University of Michigan survey.
Glassman said the constant display of high gas prices is taking its psychological toll.
Originally published on April 16, 2005
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