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Wall St. takes fifth loss
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February 7, 2002: 5:08 p.m. ET
Accounting woes, tech stocks push market to another session of losses.
By Staff Writer Alexandra Twin
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NEW YORK (CNN/Money) - Wall St. fell for the fifth session in a row Thursday as signs of strength in the job market and retail sector were overshadowed by weakness in Cisco and other techs amid the backdrop of continued accounting fears, highlighted by the congressional hearings on bankrupt energy firm Enron.
The Dow Jones industrial average lost 27.95 to 9,625.44. The Nasdaq composite index fell 30.60 to 1,782.11 and the Standard & Poor's 500 gave back 3.34 to end the day at 1,080.17.
"Until earnings and forecasts start turning around, we are going to stay stuck in this tight trading range. There is no incentive for buyers to get back in the market," said Jack Baker, head of equities at Putnam Lovell Securities.
A number of retailers -- including Wal-Mart Stores (WMT: down $0.49 to $58.39, Research, Estimates) and J.C. Penney (JCP: down $1.22 to $21.90, Research, Estimates) -- reported improved sales in January for stores open at least a year.
In the day's economic report, the number of Americans filing new claims for unemployment fell, surprising economists surveyed by Briefing.com.
But countering these positive developments were concerns about technology, embodied in a weak forecast from networking equipment maker Cisco, and accounting issues due to the congressional hearings regarding Enron. A number of Enron executives refused to testify, while former CEO Jeffrey Skilling testified that he didn't know of any deals meant to hide debt during his tenure as chief executive.
The hearings, parts of which were broadcast on TV, underscore investor nervousness about corporate accounting in the wake of Enron's collapse.
"The market is very skittish about accounting," David Katz, stock analyst at Matrix Asset Advisors, told CNNfn's The Money Gang.
Asian markets closed mixed Thursday, with Tokyo's Nikkei index ending higher but other markets losing ground. Technology reversed course in Europe, with telecom gains pushing bourses higher at the close.
Treasury prices fell, with the 10-year note yield rising to 4.92 percent by the close. The dollar was stronger versus the euro and a little weaker versus the yen. Light crude oil futures dipped 10 cents to $19.68 a barrel in New York. Gold prices held on to their recent gains, with futures in Chicago adding $2.30 to $300.60.
Market breadth was negative. On the New York Stock Exchange, decliners led advancers 8-to-7 as 1.42 billion shares changed hands. On the Nasdaq, losers topped winners nearly 3-to-2 as 1.97 billion shares traded.
WorldCom reassures; Cisco unnerves
Wireless, chip and software issues were among the names that pulled the Nasdaq down, while networking issues and select telecom services names added strength.
A negative trend, rather than any specific stock, kept the Dow industrials in the red, with IBM (IBM: down $2.72 to $103.91, Research, Estimates) and Caterpillar (CAT: down $1.19 to $47.43, Research, Estimates) the biggest decliners and Disney (DIS: up $1.13 to $22.55, Research, Estimates) one of the few advancers.
"We're just treading water," John Forelli, portfolio manager at Independence Investment wrote in an afternoon note to client. "Investors are fearful and risk-averse right now, seeing bad news around every corner, and ignoring good news that is slowly raising its profile."
Cisco Systems (CSCO: down $1.55 to $17.06, Research, Estimates) said late Wednesday that current-quarter sales may be flat with the last quarter and that it could not provide guidance beyond that. The company also reported fiscal second-quarter earnings per share of 9 cents, 4 cents better than analysts expected but down from the 18 cents earned a year earlier.
Retailers were mostly stronger. Wal-Mart said it saw an 8.3 percent rise in January, while J.C. Penney posted a 5.9 percent rise. Target (TGT: down $0.50 to $42.00, Research, Estimates) also was higher after it said sales improved 5.8 percent. But Federated Department Stores (FD: down $0.92 to $38.32, Research, Estimates), the owner of Macy's and Bloomingdale's, reported an 8.8 percent decline.
One of the day's few clear winners was Internet search service provider Overture Services (OVER: up $4.73 to $22.65, Research, Estimates), which said it continues to expect that it will substantially exceed its previous forecasts.
The stock had lost more than 41 percent of its value Tuesday after it said fellow Internet service provider EarthLink (ELNK: up $0.48 to $8.40, Research, Estimates) had not renewed a deal to list Overture's search results on its site, but was instead expanding a deal with rival Google.
Troubled telecom service provider WorldCom (WCOM: up $0.83 to $7.52, Research, Estimates) rose sharply after the company's officials said in a conference call with analysts and reporters that a credit default or a bankruptcy filing is not a concern, in response to speculation that has dogged the stock for weeks.
WorldCom also reported fourth-quarter earnings of 13 cents a share, a penny shy of estimates and a sharp decline from the 20 cents a share the company earned a year earlier. However, shares of its second tracking stock, MCI Group (MCIT: down $1.45 to $7.61, Research, Estimates), fell sharply after the company reported a worse-than-expected fourth-quarter loss and issued discouraging forward-looking statements.
Company officials for Tyco International (TYC: up $2.13 to $28.05, Research, Estimates) -- another one of the companies that have suffered from such jitters lately -- held a press conference Wednesday in an attempt to reassure investors and analysts that the company is in good health. The news reversed the stock's course on Thursday.
"Tyco and WorldCom's comments soothe the market short-term, but it's a dead cat bounce," said Jack Baker, head of equities at Putnam Lovell Securities. "Things are too uncertain right now for markets to rally." 
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