Stocks swooned again on Monday as investors remained jittery about earnings and corporate scandals after embattled telecom WorldCom (WCOM) filed for the biggest bankruptcy in U.S. history. After a midday recovery failed to generate lasting interest, the Dow Jones industrial average ended below 8,000 to its lowest level in nearly four years.
WorldCom, with about $107 billion in assets, filed for bankruptcy protection on Sunday as the company finally collapsed under pressure from about $41 billion in debt and $3.85 billion accounting scandal.
The Dow skidded 237.24 points, or 2.96%, to 7782.02, on top of the 400.41-point drop on Friday. The tech-heavy Nasdaq composite index, meanwhile, declined 36.53 points, or 2.77%, to 1,282.62. The broader Standard & Poor's 500-stock index was down 28.03 points, or 3.31%, to 819.72.
Tuesday promises to be another busy day on the earnings front. Among the companies scheduled to report results are Tyco (Tyc), drug company Wyeth (WYE), fiber-optics concern Corning (GLW), energy company Duke (DUK) and consumer products giant Colgate-Palmolive (CL).
There will be few economic data reports to guide the market before Thursday when reports on June durable good orders and existing home sales are due out. Also scheduled for that day is a final reading on consumer sentiment for last month.
In other telecom news on Monday, BellSouth (BLS), the Baby Bell in the Southeast, reported 67% lower second-quarter profit as investments and sales declined. It also cut revenue and profit forecasts.
Telecom wasn't the only area under pressure Monday. Energy company Williams Cos. (WMB) warned of a big second-quarter loss due to weakness in its energy marketing and risk management businesses. It also cut its dividend.
Meanwhile, No. 2 toymaker Hasbro (HAS) reported a wider second-quarter net loss after writing down the value of its Infogames Entertainment SA investment.
Keeping stocks from falling further was news from consumer-products powerhouse Procter & Gamble, which announced it will boost its stock buybacks in fiscal 2003, which began July 1. The news helped support the Dow.
Also on the brighter side, diversified manufacturer 3M (MMM) posted quarterly earnings that more than doubled, thanks in part to stronger sales in Asia.
Biotech concern Amgen (AMGN) says it got the government overhead to market its drug Aranesp for cancer patients who develop anemia after chemotherapy.
The market was awaiting earnings news from AOL Time Warner (AOL) which was expected after the market close.
There seems to be few forces to pull the market out of its funk over a slew of troubling issues, including mounting corporate governance problems and jitters over company earnings.
Treasuries moved higher in price as equities tumbled. With no economic data to give the bond market direction, government paper will likely continue to trade on cues from the stock market.
European markets closed lower. In London, the Financial Times-Stock Exchange 100 index was down 202.80 points, or 4.95%, to 3,895.50.
France's CAC 40 shed 174.35 points, or 5.25%, to 3,149.69.
Germany's DAX index slid 200.45 points, or 5.15%, to 3,691.43 on worries about economy and pending elections. German May construction orders fell 9% and are down 13.8% over the past year. On the plus side, May factory orders rose a revised 3.3% vs. 3.1% originally reported.
Asian markets ended lower. In Japan, the Nikkei 225 index fell 13.35 points or 0.13%, to 10,189.01 as worsening sentiment resulting from sharp slides in U.S. markets last Friday was offset by an unexpected wave of buying from domestic pension funds.
In Hong Kong, the benchmark Hang Seng index lost 215.21 points, or 2.08%, to close at 10,110.25.