(Updated from 4:02 p.m. EDT)
Take light volume on a summer Friday mixed with very bad earnings news from the technology sector and poor data about the labor market, and you get a real bummer of a day for the markets.
Dow Jones Industrial Average dropped 227 points, or 2.2%, to 10,253, while the
Nasdaq Composite was off 76, or 3.7%, to 2004. The broader market
S&P 500 closed 29 lower, or 2.4%, to 1191.
Stocks were bogged down by 11th-hour warnings issued last night by
Advanced Micro Devices
, which forecast a second-quarter earnings
shortfall due to a slowdown in the telecom industry, and
, which said second-quarter earnings would be significantly
lower than expected as a result of the slowdown in IT spending.
came from a couple of high-profile technology companies," said Todd Clark, head of listed trading at
. "And the analyst community was blindsided by weakness in their businesses."
But despite today's dreary session, some stock traders weren't overly pessimistic: "We're dealing with extraordinarily light volume. It's easy to push around a thin market," said Michael Driscoll, director of listed trading at
Credit Suisse First Boston
. "People are comfortable with the fact that earnings are as bad as they will get. And when they come back to work on Monday, they will have a chance to pick up stocks at cheap prices."
also warned, saying it anticipates first-quarter earnings and revenue, excluding charges, to be below analysts' estimates. All together, Wall Street was disappointed: BMC fell 9.1% to $20.68; AMD tumbled 27.4% to $20.80; and EMC slid 28.1% to $21.60, a new 52-week low.
In the EMC fallout,
dropped 5% to $106.50 and was the biggest drag on the Dow. Also,
lowered its estimates on IBM.
closed off 5.6% to $32.02.
On the economic front, investors were digesting the latest
jobs report. The
labor market weakened further in June, as
fell by 114,000. But the
rose to just 4.5% from 4.4% in May; economists had expected the jobless rate to rise to 4.6%.
"The bottom line is we're not out of the woods yet," said Ethan Harris, senior economist at
. "But while today's report shows the labor market is still deteriorating, it was no big surprise." Harris thinks the economy is poised to recover this year and notes that the labor market lags growth in the overall economy.
Financial stocks tumbled, with the
American Stock Exchange Broker/Dealer Index
off 3% and the
Philadelphia Stock Exchange/KBW Bank Index
Tacking on Losses
In the past month, the Dow has fallen over 900 points, and more than 8%. (It last closed above 11,000 on June 7.) For the week, it is off approximately 2%. The Nasdaq is behind about 7% and the S&P is off approximately 2%.
Tech stocks were mired in negative territory this morning: AMD rival
was off 4.7% to $28.43. The
Philadelphia Stock Exchange Semiconductor Index
closed 8.6% lower. (
took a separate look at the
fallout in the chip sector.)
were among other big-cap tech hard hit.
Among tech stocks to hit new 52-week lows today were Juniper,
(which warned earlier this week),
But there was a glimmer of good news for stocks. This morning,
sounded the starting bell for second-quarter earnings season, and the world's top producer of aluminum beat Wall Street's expectations. It posted earnings of $429 million, or 49 cents per share in the second quarter. Alcoa traded lower, however, off 2.4% to $49.80, down along with other cyclical -- or economically sensitive -- stocks.
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