Dow tumbles as investors cash in

The blue-chip index falls 275.67 points, led by a 10.4 percent drop in shares of Boeing, as analysts see little cause for excitement.

By TIMES WIRES

© St. Petersburg Times,
published October 30, 2001

NEW YORK -- The stock market fell sharply and broadly Monday as investors cashed in on last week's rally and dumped shares of the Boeing Co., which lost what is expected to be the largest military contract in history Friday.

Analysts weren't alarmed, noting that stock prices have moved considerably higher during October and that a good portion of the Dow's decline was related to bad news specific to Boeing rather than a blanket selloff.

"Considering the type of strong move we've had in stock prices since Oct. 1, this is really no surprise," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray. "A part of this is locking in some gains, the end of month is also approaching and the end of fiscal year for many mutual funds is approaching.

The Dow Jones industrials closed down 275.67 at 9,269.50, cutting short a three-day winning streak. It was the index's biggest decline since the precipitous 684-point drop on Sept. 17, when trading resumed following the terrorist attacks.

The Nasdaq Composite Index fell 69.44 to 1,699.52, led by declines in semiconductor, computer and software issues. The Standard & Poor's 500 index dropped 26.31 to 1,078.30.

"Investors at this point are looking to take profits," said Christopher J. Wolfe, equity strategist for J.P. Morgan Chase's private bank. "There is very little in the way of economic news and very little in the way of earnings updates or conference calls to try to provide some excitement here."

With virtually no market-moving earnings reports or economic data released on Monday, investors relied on sentiment. But the mood has been uncertain at best as Wall Street weighs a continually weak American economy against hopes that lower interest rates and a government stimulus package will revive growth. The result Monday was a broad-based selloff, in which few sectors were immune.

"People just seem to be lost because they know the economy is bad, but they don't know how bad," said Paul McManus, a portfolio manager at John Hancock Core Equity Fund.

But some evidence is likely to emerge Wednesday, in the government's first report on third-quarter gross domestic product, and on Friday, in the October employment report. Both reports are expected to be quite weak.

The losses came during a month that has seen gains by all three major indexes. Since Oct. 1, the Dow has risen 4.8 percent, while the Nasdaq has gained 13.4 percent and the S&P climbed 3.6 percent. Many stocks have been trading near or, in some cases, exceeding levels not seen since before the attacks; the Dow has come within 30 points of recovering all of the 1,369 it lost after the attacks, while the Nasdaq and S&P have surpassed their Sept. 10 levels.

With more third-quarter reports expected this week and the middle of the fourth quarter approaching, analysts say selling pressure is considerable. They also say worries about more terrorism or fallout from U.S. air strikes against Afghanistan is making some investors reluctant to hold big positions in the market.

"We've been trying to take profits since last week and even today," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "In fact, we expect that as companies give their midquarter updates, there will be more downward revisions."

Dow component Boeing slid $3.93, or 10.4 percent, to $33.75 in reaction to news late Friday that it had lost the largest Defense Department contract in history. Lockheed-Martin, which won the contract, lost 92 cents to $49.

Also, McDonald's Corp. stock fell nearly 6 percent after the restaurant company scaled back its earnings estimate for next year. It also said it expects to open about 200 fewer restaurants -- 1,300 to 1,400 -- next year than in 2001. McDonald's stock fell $1.67 to close at $27.

-- Information from the New York Times and Associated Press was used in this report.

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