Updated from 4:04 p.m. EDT
Stocks fell victim to a late-afternoon selloff Thursday as investors booked profits following another helping of uninspiring earnings news
Dow Jones Industrial Average closed down 177 points, or 2.1%, to 8317, while the
Nasdaq lost 22 points, 1.6%, at 1298. The
S&P 500 lost 14 points, or 1.5 %, to 882.
The market has been increasingly conscious over the past two sessions of news suggesting war is more imminent, starting with President Bush's signing of an expanded military authorization bill on Wednesday. Reports that Iraq is ordering foreign journalists to leave the country by tomorrow hit the wires shortly before the market turned lower Thursday afternoon.
Meanwhile, an oft-cited explanation for the big rally over the last two weeks, the reallocation of money out of bonds and into stocks, reversed itself Thursday and the 10-year Treasury note added 26/32 to yield 4.13% just after 4 p.m. EDT. The 30-year bond was up 12/32, yielding 5.09%.
"With bond yields coming down, the situation in Iraq could be entering into things," said Giri Cherukuri, head trader at Oak Brook Investments. Cherukuri added that today marked a breakdown of the upward trend that had formed over the last few weeks.
The Labor Department set a buoyant tone early when it said
initial jobless claims came in better than expected, falling to 389,000 in the week ended Oct. 19, from a revised 404,000 the previous week. Economists were expecting the number of first-time insurance claims to come in at 405,000.
Two bellwether firms fell under the accounting microscope Thursday.
AOL Time Warner
said it will restate its financial results for the past two years due to bookkeeping irregularities at its America Online unit, a move that will reduce its revenue by $190 million and trim earnings by $97 million. The restatement is the result of an internal investigation of its Internet advertising and commerce transactions.
The company also posted a third-quarter profit of 19 cents a share, matching analysts' expectations, but down from the 24 cents a share it earned in the same period last year. The shares rose 7.5% at $14.55 on the
New York Stock Exchange.
posted a wide loss on a multibillion-dollar charge to write down its undersea telecommunications network, and said pro forma earnings were less than analysts had predicted. The company also said on a conference call that it must restate about $135 million of prematurely recognized revenue at its ADT alarm unit. David Boies, the corporate litigator overseeing Tyco's accounting review, said that while the probe isn't over, he doesn't now foresee more restatements.
The Bermuda-based company, which has been scrutinized heavily for accounting miscues and corruption allegations, posted a fourth-quarter loss of $1.75 billion, or 88 cents a share. In the same period last year, Tyco earned $1.37 billion, or 71 cents a share. Excluding the charge and special items, Tyco said it earned 30 cents a share, 2 cents shy of analysts' expectations. The stock was under pressure initially, but rallied and finished up 11.1% at $15.49.
Elsewhere, entertainment giant
turned a solid profit in the third quarter due to an increase in advertising revenue at its CBS television network. The company, which also owns MTV and Paramount films, posted a net profit of $640 million, or 36 cents a share, reversing a year-ago loss of $190 million, or 11 cents a share, which included a charge for its Blockbuster video business. Its shares dropped 6.1% to $44.32.
said it earned $334 million, or $1.15 a share, in the third quarter, meeting raised expectations. Kodak also set plans to cut 1,300 to 1,700 jobs as it struggles to cope with soft demand and increased competition. Kodak tacked on 0.9% to close at $34.13.
said third-quarter earnings fell 29% due to weaker sales of its blockbuster allergy drug Claritin. The company posted a net profit of $429 million, or 29 cents a share, down from $601 million, or 41 cents a share, a year earlier. Earlier this month, Schering-Plough warned that it would not meet analysts' expectations for the remainder of 2002, 2003, and 2004. The stock traded up 2.3% at $19.12.
saw its shares slip 12.3% to $24.30 after posting a third-quarter loss and revealing on its conference call that it expects approval for its FluMist product to be delayed until March 2003, all but wiping out the possibility of the treatment being available for the upcoming flu season.
The biggest loser on the NYSE Thursday was
, which plummeted nearly 31% to $10.75 after missing analysts' third-quarter forecasts by 6 cents and warning that fourth-quarter results would be relatively flat with year-ago levels. Subsequently, Salomon Smith Barney lowered its investment rating on the stock to in line from outperform.
In Europe, London's FTSE 100 was up 2.4% to 4103, while Germany's Xetra DAX was up 2.2% to 3080. In Asia, the Nikkei fell 1.2% to close at 8614, while Hong Kong's Hang Seng closed down 0.2% at 9787.