NEW YORK (CNNmoney) - U.S. equity indexes fell Monday as nervousness about expected weak gross domestic product data and corporate news - led by Boeing's failure to win a $200 billion Defense Department contract - enhanced the selling that can often follow a sustained rally.
Stock investors have enjoyed strong gains over the last month, as indexes have rallied off of post-Sept. 11 lows.
The Dow Jones industrial average lost 275.67, or 2.89 percent, to close at 9,269.50. It was the largest point drop since September 20, the fourth day that markets were open following the September 11 attacks, when the average fell 382.92 points, or 4.3 percent.
The Nasdaq composite index dropped 69.44, or 3.93 percent, to end at 1,699.52, marking the largest point drop since October 17, when the composite fell 75.73 points. The S&P 500 gave back 26.31, or more than 2 percent, to close at 1,078.30, also the largest pullback since October 17, when it gave back 20.45 points.
Treasury securities rose, with the 10-year note yield sliding to 4.48 percent from 4.53 percent late Friday. The dollar was down versus the euro and the yen.
"We've had a market where negative news on the economy and the corporate profit picture have dominated," Tony Dwyer, chief market strategist at Kirlin Securities, told CNNfn. "Companies may have beaten lowered estimates, but we're expecting weak economic reports this week."
On Wednesday, the U.S. Department of Commerce will release the third-quarter growth rate for gross domestic product (GDP) - the broadest measure of the nation's economy.
Economists expect GDP to decline by 1 percent, compared with a revised growth of 0.3 percent in the second quarter. The number is preliminary and will be revised.
The data could present a challenge to both psychological and statistical hopes for a near-term recovery. While some experts argue that the economy already is in a recession, many economists say the technical definition of a recession is two consecutive quarters of negative growth.
Further weakness may become apparent when the Conference Board releases its October index of consumer confidence Tuesday. Economists expect the number to fall to 95.9 from a revised 97.6 in September.
"This is some orderly profit-taking in a market that is susceptible to bad news, but I wouldn't put it in a negative context. You have a market that's pushed 1,600 points off its lows recently, so a couple hundred points back down is not so bad," said Jack Baker, head of equities at Putnam Lovall Securities.
"Fundamentally and technically, you have a market that's back where it was before Sept. 11," Lovall said.
Monday's market breadth was negative. On the Nasdaq, losers beat out winners by a nearly 7-to-4 margin as 1.66 billion shares traded hands. On the New York Stock Exchange, decliners topped advancers by 2 to 1 as 1.09 billion shares changed hands.
In overseas stock trading, European markets closed lower on weakness in telecommunications and banking issues, while Asia's stock markets also fell. Latin America added some pressure as long-held concerns that Argentina might default on its $132 billion debt were intensified.
Boeing pressures Dow
General Motors and Boeing both pressured the Dow on insecurity stemming from their multibillion-dollar deals. On the Nasdaq, the computer hardware and telecommunications sectors were among the leading losers on the broad-based tech selloff.
Aircraft maker Boeing (BA: down $3.93 to $33.75, Research, Estimates) lost out to competitor Lockheed Martin (LMT: down $0.92 to $49.00, Research, Estimates) for a $200 billion Joint Strike Fighter contract from the government.
Echostar Communications (DISH: down $1.18 to $24.08, Research, Estimates) agreed to buy GM's Hughes Communications (GMH: down $0.99 to $14.36, Research, Estimates), the company's satellite division, for about $26 billion in cash and stock.
This was bad news for News Corp. (NWS: down $1.80 to $27.25, Research, Estimates), which had offered to buy the company for $22.5 billion. GM (GM: down $2.64 to $42.76, Research, Estimates) shares also fell on the deal.
The Dow's other big pressure points were United Technologies (UTX: down $2.57 to $54.44, Research, Estimates) and 3M (MMM: down $3.30 to $106.53, Research, Estimates).
UAL (UAL: up $0.22 to $14.15, Research, Estimates) Chairman and CEO James Goodwin was replaced Sunday with board member Jack Creighton, four days after the International Association of Machinists, whose members own about 20 percent of the company, called for Goodwin's removal.
AT&T (T: down $0.24 to $15.77, Research, Estimates) is considering a $5 billion-to-$7 billion bond offering, according to the Wall Street Journal.
Chip makers Intel (INTC: down $1.68 to $24.18, Research, Estimates) and Xilinx (XLNX: down $3.32 to $30.01, Research, Estimates) dragged down the Philadelphia Semiconductor index by 4.5 percent. The index had risen 13 percent the previous week.
There were a few positive notes:
-- Express delivery service FedEx (FDX: up $1.38 to $40.86, Research, Estimates) said it will top forecasts when it reports its second-quarter earnings.
-- Real estate company Cabot Industrial Trust rose on news that it had agreed to a buyout offer from privately held Calwest Industrial Properties (CTR: up $3.86 to $23.81, Research, Estimates) for $2.1 billion in stock and assumed debt.
-- Building on national security fears, technology company Titan (TTN: down $0.65 to $26.35, Research, Estimates) said Friday that the U.S. Postal Service will buy up to 20 of its electron beam systems for about $40 million to sterilize mail and eliminate the threat of anthrax. Surebeam (SURE: up $1.67 to $14.92, Research, Estimates) will subcontract.
Fewer corporate reports
As the September-quarter reporting period is winding down, earnings are expected to have fallen more than 20 percent, the third straight quarterly decline, according to the research firm First Call. However, some analysts say that investors appear to be looking ahead to the first half of 2002, when conditions are expected to improve.
In the very near term, Lovall Securities' Baker points to historic data that support the tendency for markets to make gains in the last week of October through November.
On the bioterrorism front, anthrax tests at the U.S. Supreme Court building forced justices out of their Washington courtroom for the first time since the building was erected in 1935. The justices continued working from the U.S. Court of Appeals.
In Afghanistan, U.S. jets resumed bombing specific targets Monday on the southern Taliban stronghold of Kandahar after a relatively quiet Sunday night. 
|
