News that Motorola plans to cut up to 4,000
additional jobs sent the stock market down sharply Friday as
investors grew more pessimistic about the prospects of a quick
turnaround for the economy and company earnings.
Pharmaceutical and financial stocks advanced, but not enough to
offset the broader downturn that began early in the session on
reports that Dell Computer was also pondering layoffs. Analysts
said Wall Street was again shifting away from technology to sectors
viewed as less risky.
"The focus is on the near term. Are we going to go into a
recession and who is going to warn next about bad earnings," said
Robert Streed, portfolio manager at Northern Select Equity. "This
is another excuse to take profits, especially on the technology
side, where you had some significant gains last month."
The Dow Jones industrial average closed down 99.10 at 10,781.45,
according to preliminary calculations.
The weakness in technology stocks also pushed the Nasdaq
composite index down 91.09 to 2,470.97, while the Standard & Poor's
500 index dropped 17.77 to 1,314.76.
All three major indexes are now within a handful of points of
where they started 2001. The Dow is slightly down for the year.
Motorola's announcement Friday wasn't a huge surprise, given
Motorola's previous 5,000-plus job cuts since December in its cell
phone business. But it accelerated a technology selloff already
under way on more general concerns that the sector will suffer in
the months ahead as businesses and consumers spend less.
Motorola fell 92 cents to $18.90.
Dell dropped $2.63 to $23.44, a 10 percent loss, on a Wall
Street Journal article that the computer maker was considering job
cuts.
Future performance worries also hurt Nortel Networks, which fell
$2.20 to $30.50, and Oracle, down $3.56, or 13 percent, at $23.56.
The market has been struggling for months with worries about
profits and whether stocks are fairly valued in light of the
slowing economy. Two interest rate cuts by the Federal Reserve last
month helped spur some strong technology gains, but the rally has
since faltered.
"It just seems like there hasn't been any good news for a while
in technology, and these are the latest examples," said Charles
Pradilla, chief investment strategist at SG Cowen Securities. "The
earnings news and the announcements we've heard in this sector have
been overwhelmingly negative.
"There really isn't a reason for these stocks to move higher
right now."
Financial and pharmaceuticals sectors were stronger, reflecting
investors' desire for less volatile stocks. Banker J.P. Morgan
Chase rose 27 cents to $51.95, while pharmaceutical company Johnson
& Johnson climbed 35 cents to $94.98. Utilities also benefited;
Duke Energy climbed 27 cents to $41.30.
But retailers trailed for a second session after Thursday's
selloff on worries that the sector will struggle in a sluggish
economy. Wal-Mart dropped $1.90 to $50.40.
Also Friday, Lucent fell $1.53 to $15.36, a 9 percent drop, on a
Journal report that the Securities and Exchange Commission is
investigating accounting practices at the company.
Trading was relatively light on the New York Stock Exchange,
where declining issues outnumbered advancers 17 to 13. Volume came
to 1.05 billion shares, down from 1.08 billion Thursday.
The Russell 2000 index fell 5.84 to 497.05.
Overseas, Japan's Nikkei stock average rose 2.6 percent.
Germany's DAX index was dropped 2.1 percent, Britain's FT-SE 100
slipped 0.7 percent, and France's CAC-40 fell nearly1.1 percent.
