Wall Street plunged back into pessimism Friday,
sending stocks sharply lower after Nortel Networks, Dell Computer
and Hewlett-Packard warned that their business will further slow
this year. A spike in inflation increased the market's woes.
Afternoon news reports of a U.S. and British air attack over
Iraq exacerbated the selloff. American and British planes
reportedly struck Iraqi air defense sites in a mission to destroy
threatening radar systems.
In heavy afternoon trading on Wall Street, the Dow Jones
industrial average fell 146.08 to 10,744.94.
The tech-focused Nasdaq composite index tumbled 154.05 to
2,398.86 after advancing the previous two sessions. The broader
Standard & Poor's 500 index declined 30.44 to 1,296.17.
The market's losses came largely from the technology sector.
Nortel plunged $9.91, or 33 percent, to $19.88. After the market
closed Thursday, the fiber optics maker cut its profit outlook and
raised its planned job cuts to 10,000.
A bleak outlook also hurt Dell, which fell $2.20 to $22.80. Dell
announced late Thursday it missed earnings expectations by 1 cent
and that it will cut 1,700 jobs.
"There's a combustible combination of bad news out there from
the technology sector," said Alan Ackerman, executive vice
president at Fahnestock & Co.
The Dow's tech losses were led by Hewlett-Packard, down $4.50 at
$31.85. Hewlett-Packard also warned of challenging business
conditions late Thursday. The computer maker's bad news spread to
other Dow tech stocks, including Microsoft, down $2.63 at $56.19.
The litany of bad news from the tech sector combined, Ackerman
said, to "bring back a lot of caution and exhaustion for traders
who are trying to figure out where to go in the market, especially
before a long, holiday weekend." The market is closed Monday in
observance of Washington's Birthday.
Friday's losses were a dramatic retreat from the more optimistic
approach investors had taken toward high-tech stocks in recent
weeks. While Wall Street had tolerated individual companies'
reduced business forecasts, the news of three dismal outlooks at
once rattled the market.
Investors also bid stocks lower after the Labor Department
reported wholesale inflation rose 1.1 percent in January, the
biggest jump in a decade. The spike could diminish the chances that
the Federal Reserve Board will lower interest rates at its meeting
The two cuts the Fed made in January are expected to help
improve the sluggish economy and anemic corporate earnings in the
second half of the year. Investors have been hoping for more
reductions, although they were disappointed earlier this week when
Fed Chairman Alan Greenspan indicated future cuts will be less
aggressive than the market had wanted.
Declining issues outnumbered advancers nearly 2 to 1 on the New
York Stock Exchange. Volume was 840.50 million shares, well ahead
of 734.07 million at the same point Thursday.
The Russell 2000 index, which tracks the performance of smaller
company stocks, was down 10.90 at 497.95.