For investors, it's hard to remain calm when there are so many danger signs popping up.
International financial leaders ended five days of talks without coming up with a strategy to stop the world's economic slide. US Treasury bonds and the dollar fell, signaling that big investors are getting out of the markets altogether and holding their wealth in cash. And several big US companies -- including Raytheon, Packard-Bell, and Ziff-Davis -- announced plans to fire workers to cut costs.
Is it any wonder that stocks, led by Internet and PC-related issues, were routed again?
"Emotion is driving the near-term action in the market," said Tony Dwyer, chief strategist at Ladenburg Thalmann. "The market keeps looking for a reason to be down."
The Wired Index dropped 7.66 points to 326.09. The Dow Jones Industrial Average lost 9.78 to 7731.91, recovering from a 274-point drop earlier in the day. The Nasdaq, home of the biggest technology companies in the United States, plunged 43.49 to 1419.12.
Once again, PC and Internet-related stocks were pummeled as investors fled any type of risky security. It didn't help that Dell Computer's chairman, Michael Dell, said his company is worried about the economic trouble around the world.
"There are obviously a lot of economic worries in the world, and that's going to create a lot of worries for buyers and sellers in our industry," Dell said.
To be sure, he also said he expects his company to grow faster than its rivals for the foreseeable future. Still, investors took the message that even Dell won't emerge unscathed, analysts said. Dell (DELL) fell US$2.13 to $48.44, after dropping 20 percent earlier in the day.
The falling dollar also took some of the blame for the broad sell-off. Usually, a falling dollar is good for the US economy, because it makes American goods cheaper on international markets. But Wednesday's decline, the biggest in 25 years, was so big that it could disrupt the business plans of US companies.
"Companies want a stable currency so they can forecast profits and to hedge," said Doug Myers, vice president of equity trading at Interstate/Johnson Lane. "When you have wildly fluctuating currency prices, commodity prices, and equity prices, it is hard to forecast what you are doing."
Microsoft (MSFT) dropped $2.94 to $91.19. Intel (INTC) lost 63 cents to $78.44.
Cisco Systems (CSCO), breaking a four-day losing streak, advanced $2.81 to $46.69.
Yahoo (YHOO) plunged $9.56 to $104.81, even though the biggest Internet directory Wednesday reported third-quarter earnings that were almost double what Wall Street had been expecting. That didn't matter Thursday. Concerns about slowing advertising spending and increased competition from traditional media companies for ad dollars spanked the stock.
Shares of AMR (AMR), the parent company of American Airlines, fell $3.75 to $47.19, after Merrill Lynch analysts downgraded their stock ratings on nine US airlines. The analysts, Candace Browning-Platt and Michael Linenberg, said the industry likely will suffer because of the economic slowdown. Fuel prices remain low and there are still plenty of travelers, but companies will be cutting back on business trips to save costs.
Hotels like Marriott International (MAR) also would be affected. Marriott dropped 13 cents to $20.75.
Needham & Co. began coverage of Applied Materials, the world's biggest chipmaking equipment manufacturer, with an unflattering "hold" recommendation. The stock (AMAT) slid 63 cents to $22.38.
Daimler-Benz (DAI), Europe's biggest industrial company, lost more ground Thursday as the dollar continued to slide. Keep in mind that when the dollar rises against other currencies, like the deutsche mark, foreign goods become more expensive to American consumers. So Daimler, maker of the Mercedes, won't fare as well. Shares of the company fell $3.88 to $65.75 in US trading.
Sony, which exports much of its consumer electronics to the United States, also fell amid worries about the falling dollar. Its US security (SNE) fell $4.81 to $64.75.
Nucor (NUE), a US steelmaker, was one of the few companies on the Wired Index to post a gain. It rose $2.44 to $40.44. Nucor chairman Ken Iverson said Thursday he is comfortable with 1998 third-quarter earnings in a range of 60 cents to 65 cents a share, on target with what Wall Street had been expecting.
FDX (FDX), parent company of Federal Express, dropped $1.25 to $45.56. The overnight delivery company said it will delay introducing service to Shenzhen's Huangtian International Airport until next spring. Fedex didn't explain why, but analysts suspect slowing international traffic and cutbacks in business expenses like express delivery may have contributed.
Financial columnist David Lazarus will return Friday. Reuters contributed to this report.
