Stocks Close Flat on Economic Woes

Worries that the weak economy and struggling stocks will bite into profits at Wall Street's biggest firms buffeted brokerage stocks sending a key index of financial stocks to its lowest level in nearly a month.

The American Stock Exchange broker-dealer index was down nearly 3 percent, its fifth consecutive day in negative territory and putting it at levels not seen since July 12.

"Financial stocks are always very correlated with the markets and the markets are bad," said Guy Moszkowski, an analyst at Salomon Smith Barney. "And there is a lot of macro-economic pessimism out there about when there could be a recovery."

Morgan Stanley was off $2.50, or more than 4 percent, at $55.75, while other financial stocks, like blue-chip company American Express Co. fell 57 cents to $39.22.

Trading was moderate with 822 million shares traded on the New York Stock Exchange and 1.1 billion on the Nasdaq.

Amid merger news, Solectron Corp. fell $2.16 to $15.04 after the world's largest electronics contract manufacturer agreed to buy Canada's C-MAC Industries Inc. for $2.7 billion to expand its technology, manufacturing capacity and access to the automotive market.

Based on Solectron's closing price of $17.20 on Wednesday, the deal is valued at a 33 percent premium over the Canadian company's stock at Wednesday's close. C-MAC's U.S. traded shares jumped $3.23 to $25.90.

Western Wireless Corp. was off $3.07 at $32.28 after the wireless telephone service provider posted a larger than expected loss. It also said subscriber growth fell short of expectations.

Anchor Gaming the gambling equipment maker now merging with industry giant International Game Technology jumped $2.30 to $50.10 after its earnings rose 9 percent. The company expects to report fiscal first-quarter profit of $1.25 a share, more than the average forecast of $1.15 by analysts surveyed by Thomson Financial/First Call.

Nortel Networks Corp. slipped 17 cents to $7.45 and was the most-active stock on the NYSE. The world's largest telecommunications equipment supplier said it plans to privately sell $1 billion of convertible senior notes. The sale of the seven-year notes is expected on Thursday night, a person close to the sale said.

A convertible bond is a hybrid security that can be converted into company stock. Shares often fall after a company announces a sale because some investors sell the underlying stock short, the bonds may dilute the stock and bondholders rank ahead of shareholders in a company's capital structure.

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