NEW YORK (CNN/Money) -
U.S. stocks fell Wednesday after a punishing session for technology stocks, while weakness in financial issues and concerns over corporate profits and Iraq dented all three major indexes.
The Nasdaq composite (down 30.54 to 1361.51, Charts) lost more than 2 percent. The Dow Jones industrial average (down 88.04 to 8447.35, Charts) and the Standard & Poor's 500 index (down 11.87 to 891.12, Charts) both dropped more than 1 percent.
Chip stocks suffered losses on the back of a whopping quarterly miss by chipmaker Micron Technology. A steep loss in Bank of America shares led the declines in financials.
Financial stocks also garner the spotlight Thursday, with quarterly reports expected from brokerage houses Goldman Sachs, Morgan Stanley and Lehman Brothers
"There was nervousness today with Micron's announcement, but there's also nervousness from the global situation," Kenneth Polcari, market analyst with Polcari/Weicker, told CNNfn's Street Sweep."
Although some market pros cited Iraq war jitters and the resulting spike in oil prices as another pressure point, others believed the market had already priced in a war scenario.
"I think the market is beset with tenacious negativity. It's a 'glass is half empty' attitude in the market, where bad news is interpreted as bad news and any good news is just OK," said Douglas Altabef, market strategist with Matrix Asset Advisors.
After the close, Oracle (ORCL: down $0.39 to $10.63, Research, Estimates) posted a second-quarter profit 2 cents better than expectations but flat with the year earlier. Oracle shares climbed more than 5 percent to $11.18 in after-hours trading.
Market breadth was negative. On the New York Stock Exchange, decliners beat advancers more than 2 to 1 as 1.3 billion shares were traded. On the Nasdaq, losers also were ahead of gainers 2 to 1 as 1.4 billion shares changed hands.
Treasury prices rose, sending the 10-year note yield down to 4.06 percent from 4.11 percent late Tuesday. The dollar slipped against the yen, and was little changed against the euro.
Micron knocks the chips
Chip stocks led the tech collapse after getting a one-two punch. Micron Technology (MU: down $3.06 to $10.22, Research, Estimates) -- the second-largest maker of computer memory chips -- late Tuesday posted a wider-than-expected loss for its fiscal first quarter, citing lower selling prices for its products.
Merrill Lynch downgraded the stock to "neutral" from "buy," saying it does not think the company is in a position to benefit from a recovery in Dynamic Random Access Memory (DRAM ) prices.
Dutch chip-equipment maker ASML (ASML: down $0.94 to $7.72, Research, Estimates) added more sour news. The company announced it would cut 1,450 jobs and sell or close its loss-making U.S. businesses in a bid to reach breakeven faster amid an industry slump.
Blue chips Intel (INTC: down $0.76 to $17.13, Research, Estimates), IBM (IBM: down $1.18 to $79.13, Research, Estimates) and Microsoft (MSFT: down $0.83 to $53.53, Research, Estimates) pressured the Dow industrials amid the tech downdraft.
Oil, gold prices spike as war worries grow
Traders said the possibility of a war with Iraq weighed down market sentiment. Senior Bush administration officials indicated that the president is poised to declare that Iraq has, in the view of the United States, fallen short of its requirement to provide a complete and accurate accounting of its weapons programs to the United Nations.
The White House said Wednesday the declaration of arms was Saddam Hussein's "last chance."
Light crude oil futures rose to more than $31 barrel -- their highest level since October -- but slipped back to settle at $30.43.
Gold prices also hit a new 5-1/2-year high of $342.80 an ounce in New York.
Meanwhile, Conseco's bankruptcy filing Wednesday was an ugly reminder to investors of the big corporate implosions that have shaken the markets in 2002. The financial services company filed for Chapter 11 protection after nearly four months of talks with its creditors to restructure nearly $6.5 billion in debt. Conseco, with reported assets of $52.2 billion, becomes the third-largest bankruptcy in U.S. history, behind WorldCom and Enron.
Conseco shares were delisted from the New York Stock Exchange earlier this year. Financials were among the sector losers, led by a sharp fall in Bank of America (BK: down $4.11 to $22.39, Research, Estimates) shares. The bank said it would take a $240 million charge in the current quarter, mostly to cover losses on aircraft leases to UAL (UAL: up $0.11 to $1.38, Research, Estimates)'s bankrupt United Airlines unit.
Prudential Securities and Credit Suisse First Boston slashed their fourth-quarter earnings estimates for the bank.
With less than two weeks to go before the end of 2002, the Dow is down nearly 16 percent for the year, the Nasdaq is down 30 percent for the year, and the S&P 500 index is sporting a loss of about 22 percent.
In overseas markets, Asian-Pacific stocks finished lower, with Tokyo's Nikkei index down 2 percent. European bourses also closed with losses.
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