Stocks Fall on Renewed Jitters

N E W  Y O R K, July 16, 2001 -- Stocks fell today astechnology stocks led the market down amid negative commentsabout the prospects for computer-chip makers and relatedcompanies, including Applied Materials.

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The Nasdaq composite index fell 55.66, or 2.67percent, to 2,029.13, according to the latest data, while theDow Jones industrial average dropped 66.94 points, or0.64 percent, to 10,472.12. The benchmark Standard & Poor's 500index lost 13.23 points, or 1.09 percent, to 1,202.45.

"Reality has hit this group on a shorter-term basis, andthe optimism that may have prevailed vis-a-vis an earlierturnaround was at least diminished if not extinguished by theselatest pronouncements," said Ned Riley, chief investmentstrategist at State Street Global Advisors.

Report Lowers Sentiment

Art Hogan, chief market analyst at Jefferies & Co., saidbrokerage Wit Soundview was one of the purveyors of bad news onthe semiconcductor companies. Hogan said a research note fromthe firm reflected bearish comments by officials of chipequipment maker Applied Materials at the Semicon West meetingin San Francisco.

Applied Materials, a maker of equipment used to makesemiconductors, fell 9.5 percent, or $4.41, to $41.95. Thecompany met with analysts at the industry conference, but thecompany was not available to comment on the proceedings.

"The Wit Soundview report was basically a confirmation ofwhat the AMAT [Applied Materials] officials had said and thatwas basically that there still seems some softness into nextyear in this space," Hogan said.

Amid worries around the Applied Materials conference andanalyst comments, "there's negative concern about the group,"said Tim Grazioso, manager of Nasdaq trading for CantorFitzgerald & Co.

Corporate News

Elsewhere, investors got earnings reports from some of the1,500 companies set to hand in their scorecards this week,including a mixed bag of results from financial servicesheavyweights like Citigroup and The Bank of New York.

Citigroup rose 29 cents to $49.15 and Bank of New Yorktumbled nearly 13 percent, or $6.40, to $43. Bank of New York,parent of one of the oldest U.S. commercial banks said its

profits rose 8 percent, put predicted future earnings couldfall slightly short of expectations if weak stock-marketconditions persist.

Satellite service provider Hughes Electronics Corp.,which warned last month that it would add significantly fewercustomers than expected in the second quarter, reported lowercash flow from operations for the period and cut its outlookfor the full year. Its shares tumbled $1.50 to $18.95.

A big decliner was drugmaker Pharmacia Corp. whichfell more than 8 percent, or $4.19 to $42.66. The company saidafter Friday's close it will supply extra clinical data to theU.S. Food and Drug Administration, which found deficiencies inPharmacia's application for its pain management drug, parecoxibsodium.

Check on the Economy

The Commerce Department issued May business inventory figures that showed an unchanged reading. The market, analysts said, is likely to take thissomewhat negatively as economists on average were expecting adecline of 0.1 percent. The government also revised its Aprilreading to a decline of 0.2 percent, compared with a previousreading of unchanged.

Working off inventories "would be one of the major thingswe need to accomplish in the near term to get any sort ofturnaround in the global economy," said Jefferies' Hogan.

Federal Reserve Bank of Dallas President Robert McTeersaid Sunday he does not see much hope that the U.S. economywill rebound strongly very soon, and he left the door open forfurther interest-rate cuts.

McTeer told legislators from Georgia that the UnitedStates is not in a recession, but is mired in a sharp growthslowdown.

"I don't see anything for a strong near-term recovery,"McTeer said at the annual meeting of the Council of StateGovernments' Southern Legislative Conference in Savannah.

Friday’s Highlights

U.S. stocks inched higher Friday as Wall Street lookedpast disturbing profit reports to bet the outlook may improvelater in the year. Gains came even after tech firms, such asRambus Inc., said earnings fell amid soft demand inthe slowing economy.

On Thursday, stocks racked up theirbiggest gains in more than two months after corporate iconssuch as software titan Microsoft Corp. boosted hopesthat profits could edge higher by the fourth quarter.

The tech-rich Nasdaq Composite Index rose 9.05points, or 0.44 percent, to 2,084.79, Friday, and theblue-chip Dow Jones industrial average gained 60.07points, or 0.57 percent, to 10,539.06. The broader Standard &Poor's 500 Index added 7.54 points, or 0.62 percent, toend at 1,215.68.

The Associated Press and Reuters contributed to this report -->