Stocks took a massive beating Tuesday, with the Dow Jones industrial average tumbling some 374 points, while the Nasdaq couldn't sustain an early-morning rally and ended up shedding 57 points. Major European stock markets and Tokyo finished down slightly, while the Hong Kong market set a record close.
|The Dow closed down more than 374 points, the fourth-biggest loss ever, while the Nasdaq fell more than 57 points
The Dow fell nearly 3.7 percent, to 9,796.03, while the Nasdaq composite index closed the day at 4,847.81, a 1.2 percent drop.
Much of the Dow's plunge the fourth-biggest loss ever was due to Procter & Gamble, which lost nearly a third of its value after warning investors that higher raw materials and manufacturing costs would cause its fiscal third-quarter earnings to fall 10 percent to 11
percent from a year earlier.
Shares of the consumer products giant plunged 27.57, to 59.875.
The warning from Procter & Gamble made an already nervous market even more anxious about industrial and financial stocks that have suffered lately while high-tech stocks have flourished.
"This P&G; warning reinforces the argument that higher interest rates will affect the 'old economy' stocks, but the 'new economy' is going to sail on," said Chuck Hill, director of research at First Call/Thomson Financial in Boston.
Although Nasdaq stocks were down Tuesday, they suffered less than stocks of the more traditional companies.
Shortly after the session began, the Nasdaq rose more
than 100 points to 5,006.78 before pulling back on profit-taking. Just two months ago, the Nasdaq passed 4,000, and four months ago it crossed 3,000.
The Nasdaq has surpassed the Dow and other indicators since late
last year, as investors scoop up high-tech, Internet and biotechnology stocks, which are seen as having the greatest potential for profit growth.
But analysts said the Nasdaq's incredible gains have left it
vulnerable to investors eager to collect some profits.
"The Nasdaq has a history of having trouble penetrating major
new barriers," said Robert Stovall, market analyst at Prudential
Securities. "There's a strong impulse to take profits, because it
seems unbelievable that this thing can keep running."
|The Dow fell over 400 points Tuesday, but after a late rally closed down 374 the market's fourth-biggest drop in history|
Worries about first-quarter profits, which companies
will begin reporting next month, also spread throughout the market, and
it was clear no stocks even the high-tech issues were immune.
However, Microsoft, which trades on the Nasdaq, rose 2 1/4 to 92 7/8, after a Goldman Sachs analyst indicated that settlement talks in the software giant's antitrust suit may be progressing.
A $21 billion merger also stimulated the technology sector.
VeriSign Inc., a leading provider of Internet encryption
technology, is buying Network Solutions Inc., best known as a
registry for domain names on the Internet. Network Solutions soared 40 56 3/4 to 407 3/8, while VeriSign fell 47 7/16 to 200 1/2.
European and Asian Stocks
Global share markets started easier Wednesday after the Dow Jones industrial average dropped to its lowest level in nearly a year.
Dealers said share markets across the globe are likely to
remain volatile due to thin trading volumes as investors wait to
see if Wall Street continues to lose ground.
Europe's biggest bourse, the benchmark FTSE 100 was down
0.35 percent, while in Frankfurt the DAX index eased 0.87
percent and in Paris the CAC-40 fell 0.68 percent.
Hong Kong stocks also brushed aside Dow weakness with the
benchmark Hang Seng index setting a record close, finishing up
86.07 points or 0.48 percent at 17,951.43 after news that the
Hong Kong economy had grown much faster in the fourth quarter
than most economists forecast.
In Tokyo, the Nikkei 225 share index fell 177.44 points or 0.89 percent.
The Associated Press and Reuters contributed to this report