Late-session buying can't save stocks
The markets close in negative territory as investors nervous about developments between the U.S. and Afghanistan continue to dump stocks.
The Nasdaq ended Wednesday's session off 27.28 to 1,527.80. Earlier in the afternoon, the index had been down around 5 percent. The Dow Jones industrial average fell 144.27 points, or 1.6 percent, to 8,759.13. It was the third consecutive down day for the stock markets, which were closed most of last week because of the terrorist attacks on the World Trade Center.
"There's no liquidity out there, everyone is trying to sell, but no one is buying," said Bill Schaff, fund manager for the Berger Information Technology Fund. "You have to look at the long term, understand what you're buying and why."
The markets were jittery over new developments in the United States' effort to thwart terrorism. Afghanistan's ruling Taliban party said any attack against its country will be an attack against Islam. But Pakistan's President Gen. Pervez Musharraf said in a nationally televised address that the U.S. decision to find suspected terrorist Osama bin Laden does not target Islam or the people of Afghanistan.
Meanwhile, Wall Street was digesting the economic impact of the attacks. Analysts acknowledged that the market may have yet to hit bottom in reaction to last week's disaster but encouraged investors to take a longer view of stocks' value.
"The natural reaction to so devastating a psychological shock is to assume that no previous experience is comparable and thus our analytical tools are useless," wrote Merrill Lynch analyst Christine Callies in a research note. "This line of thinking can quickly lead to an emotional and highly risk-averse response on the part of equity investors."
Callies added that there are in fact a "depressing number of precedents," which investors should look to in order to find opportunities, some of which exist in wireless communications and air traffic control technology.
Before the markets opened Wednesday, investors also got a reading on the U.S. trade balance. The Commerce Department reported that the nation's trade gap shrank to $28.83 billion in July from $29.07 billion in June, slightly less than the rise to $29.6 billion that economists had expected.
In wireless stocks, Nokia was up 84 cents to $16.06, Ericsson fell 3 cents to $3.47, AT&T was off 31 cents to $17.99 and Sprint PCS was up 90 cents to $24.78.
E-commerce and portal companies took a hit.
"Clearly, the tragic events of last week are more likely than ever to tip our country into a recession and keep consumers from making large-scale purchases," said Prudential Securities analyst Mark Rowen in a research note.
The worst affected were online travel companies. Priceline.com was off another 32 cents, or 14 percent, to $2.03 after reporting that revenue will miss forecasts by around $61 million because of a slowdown in ticket purchases in the wake of the terrorist attacks. Travelocity.com was up 59 cents to $13.00 after reporting that third-quarter earnings before expenses will be 8 cents to 10 cents a share, in line with previous forecasts. Expedia was up $2.05, or 10 percent, to $21.69.
"Travel-related companies took it on the chin yesterday and will clearly be the most affected companies in our universe," Rowen wrote.
Concerns about consumer confidence also hurt online retailers. Amazon.com was down 2 cents to $7.31 and eBay was off $1.67 to $48.33. CNET's e-tailer index indicated the extent of the sector's woes; the index was down almost 5 percent.