Stocks rallied from their session lows, but still had their worst showing since February, as anxiety continued over the credit markets, housing and rising energy prices. Akamai Technologies and Exxon Mobil recorded notable losses.
The Dow Jones Industrial Average fell 311.50 points, or 2.3%, to 13473.57, in its largest one-day point and percentage decline since Feb. 27. The index was down as much as 449.77 points, or 3.3%, earlier Thursday and has lost 526.84 points, or 3.8%, from its record closing high just above 14000 on July 19. The Nasdaq Composite Index dropped 48.83 points, or 1.8%, to 2599.34, and is off 48.5% from its all-time high of 5048.62, hit on March 10, 2000. Year-to-date, it is up 7.6%. The Standard & Poor's 500 fell 35.43 points, or 2.3%, to 1482.66 - its lowest close since April 30 and largest one-day point and percentage decline since Feb. 27. The index is off 69.92 points, or 4.5%, from its record close of 1553.08 on July 19, though year-to-date, it is up 4.6%. The New York Stock Exchange Composite Index lost 275.93 points, or 2.8%, to 9654.43. Treasury yields fell as money poured in from the stock market. At 4 p.m. EDT, the 10-year note was at 4.79%. "When you have people trying to exit through the same door, this is the situation that you get," said Art Hogan, chief market strategist at Jefferies & Co. He said the selloff was rooted in macro themes like the worries raised by spreading credit issues and the market's reawakening to the price of oil. Nymex crude oil for September delivery settled down 93 cents, or 1.2%, at $74.95 per barrel after trading above $77 earlier in the session. "I think you are seeing negative factors compounding on each other, and managers are trying to deal with anticipated future risks in the market," said Scott Fullman, director of investment strategy at I.A. Englander & Co. "They are trying to reallocate their holdings - (trying) to determine where the risk factors are in the market for the next couple of months." Akamai (Nasdaq) fell $8.91, or 19%, to $38.27 after reporting second-quarter results in line with the its guidance, but its outlook failed to impress Wall Street analysts who say concerns remain about gross margins. Dow Industrial Exxon Mobil fell 4.56, or 4.9%, to 88.23 - the second largest percentage decliner on the index. Second-quarter net income fell slightly to $10.26 billion, or $1.83 a share, from $10.36 billion, or $1.72 a share, a year earlier. Revenue fell to $98.3 billion from $99.03 billion. Apple (Nasdaq) rose 8.74, or 6.4%, to 146, hitting an all-time high, and was the biggest percentage gainer on the S&P 500 after the company reported fiscal third-quarter earnings rose more than 73%. The computer maker said record sales of iPods and Macs helped fuel profit growth and a 24% rise in revenue. Apple also said it sold 270,000 iPhones in the period and reiterated its goal of selling 10 million of the cellphones by the end of next year. | |
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| Tremendous Downside Pressure | |
| Volume on the New York Stock Exchange was 2.778 billion shares. Down volume dwarfed up volume by 2.6 billion to 167.6 million, and stocks that fell in value massively outweighed those that rose, 3,042 to 314. "That is tremendous downside pressure in the marketplace," said Fullman. "These are not the type of ratios you see on a normal day." Ford Motor rose 12 cents, or 1.5%, to 8.09 after reporting its first profit in two years as North American losses substantially narrowed amid its ongoing restructuring. The auto maker also said it's "exploring in greater detail" the potential sale of the combined Jaguar and Land Rover business with parties who have expressed interest. | |
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| Financial Stocks Among Those That Fell | |
| Dow Chemical fell 2.22, or 4.9%, to 43.45 despite second-quarter earnings rising 1.6%, as volume increases in the Asia Pacific region, Latin America and Europe offset weakness in the North American housing and automotive sectors. Baidu.com (Nasdaq) leapt 25.83, or 14%, to 209.06. Second-quarter net income more than doubled at the Chinese Internet search provider due to an increase in online marketing customers. The company also forecast strong revenue growth for the current quarter. Hanesbrands rose 3.42, or 13%, to 30.07, setting an all-time high. Second-quarter earnings fell 57% but beat Wall Street analyst expectations despite flat sales, with cost-cutting driving most of the upside, says Morgan Stanley. Financial stocks dropped Thursday, on continued fears over tightening credit and a weak housing market. Dow Industrial JPMorgan Chase fell 1.19, or 2.6%, to 44.08, reaching its lowest level since last August. Merrill Lynch lost 2.22, or 2.8%, to 75.88. Lehman Brothers fell 3.16, or 4.7%, to 64.50, and Citigroup dropped 1.40, or 2.8%, to 47.81, setting a 52-week low. Wells Fargo fell 92 cents, or 2.7%, to 33.65. The home lender will stop making subprime mortgages through brokers, in a move aimed at reducing late payments and defaults that have been plaguing the entire mortgage industry. E*Trade Financial fell 1.41, or 6.9%, to 19.05, its lowest level since Nov. 16, 2005, after reporting second-quarter earnings rose from a year before as the discount broker continued to add customer accounts. However, E*Trade was hit by legal and regulatory costs. Goodyear Tire & Rubber rose 2.87, or 9%, to 29.18 after reporting a jump in second-quarter earnings as its focused on high-margin products, cost cuts and sales in emerging markets. Kraft Foods fell 1.40, or 4%, to 33.44. Berkshire Hathaway, run by billionaire Warren Buffett, has acquired a small stake in the company, joining veteran Wall Street raiders Carl Icahn and Nelson Peltz, The Wall Street Journal reported. Kraft has been in a confrontation with activist investors who want faster change, though it is unclear whether Buffett sides with the activists or with the management. Level 3 Communications (Nasdaq) fell 69 cents, or 12%, to 5.03 after reporting a second-quarter loss of $202 million, or 13 cents a share, compared with a loss of $201 million, or 23 cents a share, a year ago. The Internet company's operating loss for the period widened to $79 million from $18 million. Cummins rose 6.34, or 5.8%, to 116.15 after reporting second-quarter earnings per share of $2.13, well above Wall Street projections of $1.59. The engine maker increased its 2007 earnings view as sales rose to $3.34 billion from $2.84 billion, boosted by growth in its non-heavy-duty truck engines market. Sonus Networks fell 1.37, or 17%, to 6.91. The maker of Internet phone equipment said shifts in capital spending patterns of some operators will damp its revenue growth. Owens-Illinois rose 5.01, or 14%, to 40.04, reaching its highest level since Aug. 20, 1998, as second-quarter net income jumped to $149.7 million, or 89 cents a share, from $42.6 million, or 24 cents a share, a year earlier on glass factory operating performance and existing contractual sales price adjustments. All 15 components of the Dow Jones Utility Average fell, with Public Service Enterprise leading the way down 4.41, or 5.1%, to 82.52. Selling also took hold of the Dow Jones Transportation Average, which saw 19 of its 20 components fall Thursday. Shares of American Airlines parent AMR marked the biggest drop on a percentage basis, with a decline of 1.74, or 6.2%, to 26.38. | |
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