Stocks Fall on Earnings Warnings

N E W  Y O R K, July 5, 2001 -- Stocks slumped today asinvestors were jolted by a new batch of bleak corporateearnings forecasts including a bombshell from Britain's Marconi that its profits would be halved thisyear.

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The announcement from the leading telecommunicationsequipment maker hit related technology stocks worldwide. Butinvestors returning from the Independence Day holiday,which closed financial markets on Wednesday, still got more badnews from retailer Federated Department Stores andother companies.

Tech heavyweights, including Web gear giant Cisco Systems, led the Nasdaq Composite Index to a loss of 60.60 points, or 2.83 percent, at 2,080.20, according to the latest available data. Nasdaq, which logged its fourth downsession in a row, saw nearly two stocks fall for each gainer.

The blue chip Dow Jones industrial average unofficially closed down 91.25 points, or 0.86 percent, at10,479.86 and the broad Standard & Poor's 500 Index was 15.20 points lower, or 1.23 percent, at 1,219.25.

Distressing News

"It basically stems from the Marconi announcement whichstarted a new sell-off in tech stocks across the board. Thenews was pretty bad," said Peter Cardillo, director of researchat Westfalia Investments.

But the selling was a "bit exaggerated", Cardillo noted,adding that trading volumes were very low with many peoplestill on holiday and with others fence-sitting ahead of Friday's key U.S. unemployment report for June. Economists on average expect the unemployment rate ticked up to 4.6 percent from 4.4 percent in May.

Marconi lost $3.68, or a whopping 52.3 percent, at $3.35 inU.S. trading and was Nasdaq's third most-active stock. Thecompany blamed the global telecoms industry slowdown and theMarconi woes spread to other issues including Finland's Nokia, the world's biggest mobile phone maker, which fell $1.84 to $20.35 and U.S.-based telecom gear giant Lucent Technologies , off 39 cents at $6.30.

Retail shares slumped after Federated, the parent of Macy'sand Bloomingdale's department stores, cut its second-quarterand full-year profit outlook. Shares fell $2.37 to $38.01.Rival May Department Stores Co. lost $1.34 to $32.11.The S&P retail index lost 1.62 percent.

Dutch computer chip equipment company ASML Holding, fell $1.42 to $20.80 on the Nasdaq. The Philadelphia Stock Exchange's semiconductor index fell3.11 percent, reflecting a drop in a number of sectoral firmsincluding sectoral giant Intel, down 62 cents at $29.84.

A bright spot was the energy sector as stocks rose acrossthe board, partly in line with firmer crude oil prices afternew data showed U.S. petroleum stockpiles fell sharply lastweek. The S&P oil and gas index rose 1.71 percent ongains by the likes of Apache Corp , up $1.51 to $51.01.

Waiting for Jobs Report

In economic news, the National Association of PurchasingManagement reported its June index of non-manufacturingactivity rose to 52.1 from 46.6 in May.

The government reported U.S. weekly jobless claims rose to399,000 for the week ended June 30, in line with economists'estimates, from a revised 392,000 in the prior week.

The main economic event this week comes Friday when thegovernment reports on U.S. payrolls.

Analysts cautioned against reading too much into themarket's action during the rest of the week.

On the NYSE, 692 million shares changed hands, while on theNasdaq, about 979 million shares were traded.

Tuesday’s Highlights

Stocks ended Tuesday's shortened session lower as profitwarnings from Internet security firms such as InternetSecurity Systems Inc. dented yet another sector ofthe beleaguered market.

Blue chips took a hit after top chemical maker DuPont said it will miss earnings forecasts because of the struggling economy.

Some 1,009 companies now have hinted at their quarterlyresults, and 688 have warned they will miss expectations,according to research firm Thomson Financial.

The technology-laced Nasdaq Composite Index fell10.51 points, or 0.49 percent, to 2,138.21 Tuesday.

The Dow Jones industrial average was off 22.41points, or 0.21 percent, at 10,571.31, while the Standard &Poor's 500 Index lost 2.67 points, or 0.22 percent, at1,234.04.

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