Updated from 3:58 p.m. EST
Stocks closed sharply lower again Wednesday as early morning sluggishness became a late-session selloff. The selling, which came despite a handful of positive earnings preannouncements, was spread broadly over the industry spectrum.
Dow Jones Industrial Average finished with a loss of 115.42 points, or 1.1%, at 10,198.29. The
Nasdaq dropped 20.05 points, or 1.1%, to 1784.35, and the
S&P 500 fell 11.36 points, or 1%, to 1125.40.
A mixture of Mideast tensions and accounting concerns fueled the selling. The latter was rejuvenated by an article in
The Wall Street Journal
that said the
Securities and Exchange Commission
had begun 49 separate accounting inquiries in the first two months of 2002, including heretofore undisclosed probes into
, a component of the Dow, said it expects
first-quarter earnings to top analysts' forecasts, as cost reductions and better-than-expected agriculture sales boosted results. The company expects to earn more than 51 cents a share. DuPont said despite the expected results, a broader economic recovery remains uncertain.
Several other companies also predicted better-than-expected earnings, including
. All three closed higher.
ended down 4% after the company laid out plans to cut around 3,700 jobs in an attempt to cope with the telecom slump. A report published earlier had said the company was considering cutting as many as 7,500 positions. WorldCom also said its
subsidiary will redeem $700 million in notes in order to reduce its debt load, which stood at $30 billion at the end of 2001. MCI was up 3%.
Goldman Sachs responded to
profit warning by lowering its estimates on several infrastructure software stocks, including
. Rational and WebMethods traded higher, while the others saw their shares move lower.
On the economic front, the Institute for Supply Management said activity in the services sector crept lower in March. The ISM's
nonmanufacturing index for March came in at a level of 57.3, compared with 58.7 in February. Economists, on average, were expecting a reading of 57. Although slightly lower than the previous month, the data remained above 50, which means the sector is growing.
Despite a backlash from media and retail investors, research reports can still move stocks, as Morgan Stanley proved this morning. The firm's analysts downgraded
to an underweight rating from an equal-weight rating, saying the stock is likely to face increased pressure in the near term. As a result, shares of the memory chipmaker fell 5% to $30.78.
was the biggest loser on the Nasdaq, falling 32.3% to $6.87 after the company
warned of an earnings shortfall. SmartForce, which makes educational software, said it now expects a loss of 26 cents to 27 cents a share, excluding charges of $2 million to $2.5 million related to its planned merger with
. The two companies mutually agreed to terminate the $284 million deal on Monday. Centra's shares were down 22.8% at $3.65.
Elsewhere in the educational software arena,
dropped 11.3% to $20.13, and
gave up 11% to $22.
A variety of energy companies have been scrutinized for their accounting following the collapse of
, and Wednesday, energy trader
was in the spotlight. The stock fell 4.3% to $28.79 in afternoon trading on the
New York Stock Exchange, following a published report alleging the company used a special investment vehicle to inflate its cash flow and lower its taxes.
Separately, the SEC is
investigating the accounting practices of Adelphia and Williams Cos. as part of a larger effort by federal regulators to crack down on questionable bookkeeping. Adelphia was lower by 6.7%, and Williams lost 4.5%.
Meanwhile, violence in the Middle East continued as Israeli troops launched house-to-house searches in the town of Salfit, arresting suspected Palestinian militants and collecting weapons. At least 43 Israelis have been killed and more than 100 wounded in attacks since March 27. Israel says it is attempting to isolate Palestinian leader Yasser Arafat and dismantle terrorist networks operating in the West Bank. Palestinian officials reported that a 27-year-old woman was killed by Israeli gunfire.
As equities sank, Treasuries moved higher. Around 4 p.m. EST, the 10-year note was up 7/32 to 96 22/32, yielding 5.31%. Shorter-term notes and the long bond were also gaining ground.
Overseas, stocks were mixed with London's FTSE 100 down 0.1% at 5248 and Germany's Xetra DAX off 0.6% at 5282. Japan's Nikkei 225 rose 1.8% to 11,401, while Hong Kong's Hang Seng lost 0.4% to close at 10,834.