Wed, Feb 14, 2001 EST
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Stocks Tumble On News of Job Cuts
By Lisa Singhania   Associated Press
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NEW YORK — News that Motorola plans to cut up to 4,000 additional jobs sent the stock market down sharply Friday as investors grew more pessimistic about the prospects of a quick turnaround for the economy and company earnings.

Pharmaceutical and financial stocks advanced, but not enough to offset the broader downturn that began early in the session on reports that Dell Computer was also pondering layoffs. Analysts said Wall Street was again shifting away from technology to sectors viewed as less risky.

"The focus is on the near term. Are we going to go into a recession and who is going to warn next about bad earnings," said Robert Streed, portfolio manager at Northern Select Equity. "This is another excuse to take profits, especially on the technology side, where you had some significant gains last month."

The Dow Jones industrial average closed down 99.10 at 10,781.45, according to preliminary calculations.

The weakness in technology stocks also pushed the Nasdaq composite index down 91.09 to 2,470.97, while the Standard & Poor's 500 index dropped 17.77 to 1,314.76.

All three major indexes are now within a handful of points of where they started 2001. The Dow is slightly down for the year.

Motorola's announcement Friday wasn't a huge surprise, given Motorola's previous 5,000-plus job cuts since December in its cell phone business. But it accelerated a technology selloff already under way on more general concerns that the sector will suffer in the months ahead as businesses and consumers spend less.

Motorola fell 92 cents to $18.90.

Dell dropped $2.63 to $23.44, a 10 percent loss, on a Wall Street Journal article that the computer maker was considering job cuts.

Future performance worries also hurt Nortel Networks, which fell $2.20 to $30.50, and Oracle, down $3.56, or 13 percent, at $23.56.

The market has been struggling for months with worries about profits and whether stocks are fairly valued in light of the slowing economy. Two interest rate cuts by the Federal Reserve last month helped spur some strong technology gains, but the rally has since faltered.

"It just seems like there hasn't been any good news for a while in technology, and these are the latest examples," said Charles Pradilla, chief investment strategist at SG Cowen Securities. "The earnings news and the announcements we've heard in this sector have been overwhelmingly negative.

"There really isn't a reason for these stocks to move higher right now."

Financial and pharmaceuticals sectors were stronger, reflecting investors' desire for less volatile stocks. Banker J.P. Morgan Chase rose 27 cents to $51.95, while pharmaceutical company Johnson & Johnson climbed 35 cents to $94.98. Utilities also benefited; Duke Energy climbed 27 cents to $41.30.

But retailers trailed for a second session after Thursday's selloff on worries that the sector will struggle in a sluggish economy. Wal-Mart dropped $1.90 to $50.40.

Also Friday, Lucent fell $1.53 to $15.36, a 9 percent drop, on a Journal report that the Securities and Exchange Commission is investigating accounting practices at the company.

Trading was relatively light on the New York Stock Exchange, where declining issues outnumbered advancers 17 to 13. Volume came to 1.05 billion shares, down from 1.08 billion Thursday.

The Russell 2000 index fell 5.84 to 497.05.

Overseas, Japan's Nikkei stock average rose 2.6 percent. Germany's DAX index was dropped 2.1 percent, Britain's FT-SE 100 slipped 0.7 percent, and France's CAC-40 fell nearly1.1 percent.

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