Stocks finished lower Tuesday amid continuing worries about corporate accounting. There was no economic data to focus on, leaving market players to ponder some negative company news.
Computer-related stocks dragged the Nasdaq composite index down 45.95 points, or 3.27%, to 1,357.85, a new 5-year low. Volume on Nasdaq was boosted by 809 million shares traded in WorldCom (WCOME), which will be delisted Friday. The Nasdaq is now down 30.4% for the year.
The Dow Jones industrial average fell 102.10 points, or 1.12%, to 9,007.75. And the broader Standard & Poor's 500-stock index lost 20.56 points, or 2.12%, to 948.09.
The latest accounting-related headlines hit Vivendi Universal (V) shares, which tumbled 21% on a French newspaper article that said there may be accounting irregularities. Moody's downgraded Vivendi's long-term debt to junk status, citing concerns about the French media company's ability to service its debt, its recent acquisitions, and its failure to sell certain assets. On Monday, the company's Chairman and CEO Jean-Marie Messier resigned.
In other news, Tyco (TYC) priced the 200 million share offering of its CIT finance unit at $23, below the expected range of $25 to $29 per share. CIT (CIT) closed at $22 in its debut today on the New York Stock Exchange.
The chip sector got hit after Morgan Stanley cut estimates and price targets on a host of semiconductor equipment names, including KLA-Tencor (KLAC) and Applied Materials (AMAT).
In addition, Salomon Smith Barney downgraded National Semiconductor (NSM) to neutral from buy, given that it thinks the company is experiencing a slowdown in its personal computer and flat-panel display component businesses.
A slew of earnings confessions also weighed on the market. Rational Software (RATL) says June quarter revenue will be between $150 million and $154 million, and EPS will be in the range of 3 cents to 4 cents. This compares to estimates of $166 million and 6 cents, respectively. The company was hurt by weakness in Americas region and the telecom sector.
Advent Software (ADVS) fell after it forecasted second-quarter revenue of $38 million to $39 million, below its earlier $48 million guidance.
Anadigics (ANAD) says that while its second-quarter outlook remains on track, it sees worse-than-expected third quarter loss per share of 33 cents on revenue of about $21 million.
Ameripath (PATH) says both third-quarter and fourth-quarter EPS will be reduced by 3 cents to 4 cents due to higher-than-expected malpractice insurance premiums. It also says if proposed revisions to Medicare payments passes, revenue would be reduced by up to $10 million.
One of Tuesday's biggest losers was First Horizon Pharmaceutical (FHRX), which plunged 81% after it cut its second quarter profit outlook amid poor sales resulting from competition from knock-off products.
Tyson Foods (TSN) fell about 9% after Prudential downgraded it to hold from buy based on price appreciation and some new fundamental issues.
Treasuries rose in price on a safe-haven bid as equities around the globe sank on more corporate confidence jitters, with French media giant Vivendi Universal the latest victim.
Data remained light on the session with auto sales as the main news of the day, says S&P MMS.
On Wednesday, a few economic reports are coming out. S&P MMS expects factory orders to rise a modest 0.3% for May, while shipments should be unchanged. The market isn't likely to pay much attention on the numbers ahead of the holiday and payrolls Friday.
In addition, the ISM non-manufacturing index, a measure of activity in the services sector, is expected to hold steady at 60.0 in June, after jumping 4.8 points in May to the 60.1 mark. The index has held above the critical 50-threshold for five of the last six months, reflecting the improving trend in the economy.
European stock markets were lower. In London, the Financial Times-Stock Exchange 100 index fell 139 points, or 2.97%, to 4,546.80 as UK June construction index slowed to 54.3 from 55.5 in May.
France's CAC 40 lost 161.71 points, or 4.15%, to 3,735.66 as French consumer confidence fell unexpectedly in June. Vivendi skidded after Moody's lowered the company's debt rating.
Germany's DAX index was down 170.86 points, or 3.91%, to 4,195.95, as EuroZone consumer and business confidence declined in June. Also, retailers worried about declining sales.
Asian markets ended mixed. In Japan, the Nikkei 225 index gained 26.88 points, or 0.25%, to end at 10,622.32. In Hong Kong, the benchmark Hang Seng index fell 106.79 points, or 1.01%, to 10491.76.