Dow , Nasdaq Lose After Days of Gains
N E W Y O R K, May 23 -- Stocks fell asprofit-taking and a return of corporate profit worries ended aweek-long equities rally that was kicked off last week by theFederal Reserve's fifth interest-rate cut this year.
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The Dow Jones industrial average fell 151.73 points,or 1.35 percent, to 11,105.51, according to the latest data.The Nasdaq Composite Index dropped 67.80 points, or2.93 percent, to 2,246.05. The benchmark Standard & Poor's 500index fell 19.99 points, or 1.53 percent, to 1,289.39.
The Nasdaq, which had been battered over the past year, hasnonetheless risen about 40 percent by the start of this weekfrom a two-and-a-half-year low it hit on April 4. The Dow andS&P were up about 20 percent and 17 percent, respectively, fromMarch lows. The latest leg of the advance came after the U.S.Federal Reserve slashed interest rates last week for the fifthtime this year by half a percentage point to lift the nation'seconomy.
"There isn't much on the horizon that would point toimproving earnings in the near future," said Edgar Peters,chief investment officer at PanAgora Asset Management Inc.,which manages $15 billion.
"There is going to be some improvement, but not to a levelthat would justify this run-up," he added. "There is someentrenchment going on. People realize they made some money andmaybe should cash that in."
Setting the tone was a bearish report on the chip industrypublished by the trade group Semiconductor Equipment andMaterials International, or SEMI. Orders from NorthAmerican-based chip equipment companies plunged 41 percent inApril compared with March levels, while the book-to-bill ratioplummeted to 0.42, the worst in 10 years.
The Philadelphia Stock Exchange semiconductor indexdropped nearly 5 percent on Wednesday. Applied MaterialsInc., the top maker of equipment used to makesemiconductors, fell $3.65 to $52.94. Rival KLA-Tencor Corp.
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The losses followed the release late Tuesday of a reportthat showed orders for gear from North American-basedchip-equipment companies plunged 41 percent to $711.8 millionin April from the previous month amid the worst slump in thesemiconductor industry since 1985.
