Stocks Crumple for Second Straight Day - TheStreet

Updated from 4:23 p.m. EDT

Sellers were in control on Wall Street Friday, and stocks closed near their session lows as the latest woes in the telecom sector pressured the major averages.

The

Dow Jones Industrial Average finished with a loss of 97.50 points, or 1%, to 9939.92, while the

Nasdaq was down 49.64 points, or 3%, to 1600.85. The

S&P 500 lost 18.02 points, or 1.7%, to 1054.99.

Blue-chips and tech stocks ended the week with two straight selloffs, erasing much of Wednesday's massive rally, when the Dow had its biggest percentage gain since September and the Nasdaq posted its biggest upswing in more than a year.

On the economic front, the Labor Department said the

producer price index, a key inflation gauge, fell 0.2% in April. Economists were predicting a 0.4% rise, according to

Reuters

. The core PPI, which excludes the volatile food and energy sectors, came in with a 0.1% increase.

Separately, the Economic Cycle Research Institute said its weekly indicator of U.S. economic activity rose to its highest level since November 2000. According to the ECRI, the latest data it has collected indicates that a recovery is unfolding and that the economy should be strengthening sufficiently to withstand any unexpected shocks, but that wasn't enough to lure in stock buyers.

Several Dow components were in the news, including

IBM

(IBM) - Get Report

, which plans to cut 8,000 jobs, or 2.5% of its workforce, in an attempt to cut costs, according to a report in

The Wall Street Journal

. The story said the computer giant could start cutting workers this quarter. Shares of Big Blue lost 25 cents to $79.68.

Meanwhile, software maker

Microsoft

(MSFT) - Get Report

was down 4% to $50.05 a day after nine states seeking antitrust sanctions against the company canceled a key demonstration of the Windows operating system with removable features.

Elsewhere,

Boeing

(BA) - Get Report

used accounting loopholes to hide production problems and losses in 1997 in order to protect a pending takeover of rival McDonnell Douglas,

Business Week

alleged in its latest issue. The magazine said the allegations were confirmed in court documents filed during a $92.5 million shareholder lawsuit settled in February. Boeing denied any cover-up, calling it a journalist's attempt to make up for missing the

Enron

story. The company also said the losses were well-known at the time of the takeover. Boeing fell 3% to $43.63.

Outside the Dow,

WorldCom

(WCOM)

fell 21% to $1.58 after its debt rating was lowered to junk status by Standard & Poor's, Moody's and Fitch. The downgrades rekindled speculation that WorldCom will eventually have to file for bankruptcy. Subsequently, Goldman Sachs lowered its investment rating on the stock to market underperformer from market perform.

Western Wireless

(WWCA)

plunged 41% to $3.35 after several brokerages lowered their investment ratings on the stock on the heels of its dismal first-quarter results. The company's quarterly loss widened from the same period a year ago, and Western Wireless said its subscriber count fell from the fourth quarter.

Another casualty was

Cooper Tire & Rubber

(CTB) - Get Report

, which dropped 11% to $22.85 following news that the tiremaker could face charges for destroying evidence in a wrongful death lawsuit.

In the biotech sector,

Protein Design Labs

(PDLI) - Get Report

beat Wall Street's estimates by a penny but lowered its expectations for the full year. The company's shares ended down 3.9% to $11.82.

ViroPharma

(VPHM)

, another biotech outfit, had it even worse. The stock lost 22% to $3.33 following word that the Food and Drug Administration plans to issue a nonapprovable letter for its experimental cold treatment Picovir.

U.S. Treasury issues were higher. Around 4 p.m. EDT, the 10-year note was up 12/32 at 98 6/32, yielding 5.11%. The long bond was the strongest issue.

Overseas markets were weaker. London's FTSE 100 was down 0.5% to 5171, and Germany's Xetra DAX was off 1.9% to 4872. Japan's Nikkei 225 finished down 0.9% at 11,531, while Hong Kong's Hang Seng lost 0.5% at 11,646.