NEW YORK (CNNfn) - News of poor corporate earnings gathered like storm clouds over Wall Street Thursday, waking up the market bears and causing heavy losses in all major stock indicators.
Blue chips tumbled amid a meltdown in the shares of Boeing, after the world's largest aircraft maker reported a 46 percent drop in its quarterly earnings. Meanwhile, debt rating agency Moody's Investors Service threatened to downgrade Japan's immaculate sovereign debt rating, triggering heavy selling in Asian markets that later hit Wall Street as well.
Coming on the back of two days of hawkish testimony and talk of an inevitable market correction from Federal Reserve Chairman Alan Greenspan, the news from Boeing and Moody's was enough to upset already nervous investors, sending many of them running for the exits and dumping stocks along the way.
The Dow Jones industrial average fell 195.93 points, or 2.15 percent, to 8,932.98, its third largest one-day point loss so far this year. Market breadth was heavily negative, with declines beating advances 2,371 to 635 as 737 million shares changed hands on the New York Stock Exchange. Several computer sell programs added speed to the market's declines.
The Nasdaq Composite lost 34.53, or 1.75 percent, to 1,935.22 and the S&P 500 index shed 24.33, or 2.09 percent, to 1,139.75.
Not all Wall Street watchers felt discouraged by the meltdown, however. Michael Holland, chairman of investment firm Holland & Co., said a temporary pullback and a reasonable dose of investor nervousness are actually healthy for the market over the long term. (404K WAV) or (404K AIFF)
The bond market closed higher, recovering after a rumor that an overseas central bank was selling U.S. Treasury bills erased the market's early gains. Bonds also benefited from the stock market's tumble as some investors took their money into the safer market for high-grade government debt. The benchmark 30-year Treasury bond rose 12/32 of a point in price, lowering the yield to 5.65 percent.
The dollar strengthened against the Japanese yen, building on gains scored after the Moody's downgrade warning. But the talk of central bank selling in the bond market kept the greenback's climb in check.
Boeing sends Dow tumbling
News that Boeing (BA) earned only 26 cents a share in the second quarter, against expectations of 33 cents, sent the company's shares tumbling 6-1/4, or just over 13 percent, to 41-1/2. Boeing's disappointing earnings came on the back of weak results by Dow components Merck (MRK) and Disney (DIS), further rattling already jittery investors. Boeing was the most active Big Board stock.
The company of Dow losers also was joined by blue chip club member Chevron (CHV), whose earnings dropped sharply in the second quarter and whose stock lost 2-9/16 to 81-9/16.
And fellow Dow component Sears Roebuck & Co. (S) slumped 5-3/8 to 51-5/16 even after reporting slightly better-than-expected results.
Elsewhere, weakness among major technology issues put additional pressure on the market, as shares of Dow member IBM (IBM) fell 3-9/16 to 123-7/8 and Dell (DELL) shed 4-1/16 to 105-3/8. Microsoft (MSFT) tumbled 3-3/4 to 113 in the face of a new Justice Department probe. Separately, the software powerhouse said sales of its new operating system, Windows 98, were poised to equal those of Windows 95 during its first 90 days on the market.
Internet-related shares, the market's hottest issues lately, once again showed their highly speculative nature. Shares of online book retailer Amazon.com (AMZN) lost 6-3/8 to 127-5/8 even after the company reported a smaller-than-expected loss late Wednesday. Amazon's shares had rallied strongly over the past few days as investors prepared to hear about the company's earnings.
But Internet service provider MindSpring (MSPG) saw its stock surge 8-11/16 to 149 after turning in a profit based on record revenues. MindSpring led the list of net gainers on the Nasdaq.
And shares of Amgen (AMGN) rallied 4-3/4 to 76-5/16 after a strong earnings report based on solid sales for the company's popular drugs Epogen and Neupogen, blood treatments used by patients on kidney dialysis and those suffering from AIDS. Lehman Brothers and BancAmerica Robertson Stephens upgraded the stock.
Finally, a tumble in the broader market failed to scare curious investors away from the shares of USEC Inc. (USU) on their first day of public trading. The stock, which priced at 14-1/4 in its initial public offering, was the second most active on the Big Board. USEC processes uranium to turn it into fuel for nuclear power plants.
(Click here for a look at today's CNNfn market movers.) 
-- by staff writer Malina Poshtova Zang
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