Light Rain82° WeatherLight Rain82° Weather

Stocks dive on profit forecasts

NEW YORK — Wall Street tumbled again Wednesday as investors worried that the global economy is poised to weaken even as parts of the credit market slowly show signs of recovery.

The major indexes fell more than 4 percent, including the Dow Jones industrial average, which finished off its lows with a loss of 514 points.

The Standard & Poor's 500 index was the worst performer among the major indexes with a 6.1 percent slide that left it at its lowest level since April 2003.

Corporate profit forecasts, a jump in the dollar and falling commodity prices signaled investors are fearful that an economic slowdown will sweep the globe even if lending begins to approach more normal levels as credit markets ease.

The dollar hit multiyear highs against several other major currencies, weighing on commodity prices.

That hurt materials and energy companies, while the fall in oil gave a boost to airlines. Technology shares fared better than the broader market following quarterly reports from Apple Inc. and Yahoo Inc.

While reduced strains in global credit markets have eased some investors' nervousness about the economy, market anxiety remains as hundreds of companies this week report third-quarter results and issue somewhat murky forecasts that are stirring unease about the economic bumps that may lay ahead.

John Thornton, co-portfolio manager at Stephens Investment Management Group LLC in Houston, said investors' fear has shifted from the immediate concerns about tightness in credit and the resulting difficulty in borrowing to the broader economy as companies come out with their quarterly numbers.

"Even if it weren't for the credit crisis we'd probably be looking toward a pretty tough recession anyway," he said.

"The third-quarter earnings are kind of uninspiring but third quarter hasn't been the real concern of people. I think the concern is the depth and duration of the downturn and the effect it's going to have on earnings."

The Dow fell 514.45, or 5.69 percent, to 8,519.21, after being down as much as 698 points in the final half hour of trading.

Still, the Dow finished above its Oct. 10 closing low of 8,451. The Dow fell 232 points Tuesday after jumping 413 points Monday.

Broader stock indicators also fell Wednesday. The S&P 500 lost 58.27, or 6.10 percent, to 896.78, its lowest close since it finished at 892.01 on April 21, 2003. The decline leaves the index 42.7 percent below its record close of 1,565.15 in October last year.

The technology-heavy Nasdaq composite index fell 80.93, or 4.77 percent, to 1,615.75.

Stocks dive on profit forecasts 10/22/08 [Last modified: Monday, November 7, 2011 4:43pm]

Copyright: For copyright information, please check with the distributor of this item, AP Business Writer.
    

Join the discussion: Click to view comments, add yours

Loading...