Wall Street report: Friday close
FEARS that a much anticipated profit recovery will not materialise capped Wall Street's worst week since September's terror attacks. The Dow Jones Industrial Average tumbled 124.34 points or 1.2% to 9,910.72 to finish below where it stood on 1 January. The Nasdaq Index fell 49.81 points or 2.9% to 1663.89, its lowest close since mid-October. For the week, the Dow dropped 3% while the Nasdaq plunged 6.7%.
Markets, which had started the day in the black on a strong report on the Gross Domestic Product, slumped on signs that the world's biggest economy might actually be losing steam. The Commerce Department reported that GDP growth reached 5.8% in the first quarter, its strongest expansion in two years.
But economists, who often compare GDP data to looking in a rear view mirror, concentrated instead on the University of Michigan's latest confidence index. It showed consumers losing the enthusiasm that helped bolster the economy during a mild recession that began last March. The index dropped to 93 in April from 95.7 in March, a two-month low.
'The indications are that the economy grew strongly in the first quarter, but has slowed down somewhat,' said Ethan Harris, economist with Lehman Brothers. 'It may not be a double dip, but the economy is not expanding as it was just a few weeks ago.'
Worries over the likelihood of a double dip, with the US economy falling back into recession, have been among reasons cited for choppy market trading this week. Investors fear a weaker economy will snuff out a rebound in profits already factored into share prices.
Internet security firm VeriSign plunged $8.35 or 46% to $8.35 after it reported lower than expected profits and said it would cut about 10% of its workforce.
Enron rival Dynegy, which on Thursday confirmed an inquiry into its books by the Securities and Exchange Commission, dropped another $4.31 or 22% to $14.90.
Tyco International, which has confounded investors with its changes of course amid questions over its bookkeeping, dipped another 85 cents or 4.1% to $19.90, down from $60 in January.
Gemstar-TV Guide, 40%-owned by News Corp, was knocked down $1.77 or 16% to $9.37, after it was reported that the International Trade Commission was disputing some of its patent claims to interactive TV programme guides.
AOL Time Warner, which earlier this week reported a record $54bn loss related to its merger, fell 77 cents or 4% to $18.72, despite reports it might sell all or part of its cable TV assets.
Walt Disney eased 90 cents or 3.6% to $24.10 as it topped quarterly profit estimates, but failed to convince investors and analysts of a favorable outlook for its businesses.
Cereal maker General Mills stumbled $2.37 or 5.2% to $42.93 after it lowered its profit forecast.
Among Dow components, American Express fell 51 cents or 1.2% to $42.10, Eastman Kodak lost 58 cents or 1.8% to $32.60, IBM surrendered $2 or 2.3% to $84.71 and Microsoft gave up $2.23 or 2.3% to $51.20.
