Techs stocks, broader markets reel
The Dow and the Nasdaq fall as Federal Reserve Chairman Alan Greenspan tries to reassure investors about the American economy.
The Nasdaq composite index fell 56.87 to 1,470.93, and the Dow Jones industrial average was down 382.92 to 8,376.21. It was the fourth day of declines for both indexes since markets reopened after terrorist attacks last week that brought down the World Trade Center and part of the Pentagon.
Greenspan tried to reassure Americans that despite the blow that last week's terrorist attacks will undoubtedly have on short-term prospects for the already weakened economy, the long-term outlook remains bright. "Much economic activity ground to a halt last week," Greenspan told the Senate Banking Committee. "But the foundations of our free society remain sound, and I am confident that we will recover and prosper as we have in the past."
Investors are likely to hear more reassuring comments about the economy when President Bush speaks to Congress on Thursday night. Until then, they have a wealth of economic data to digest.
Thursday's jobless claims data, which didn't yet reflect last week's tragedy, showed that the number of Americans asking for first-time unemployment benefits fell last week. The number of claims dropped by 49,000 to 387,000, according to the Labor Department.
Housing starts data indicated the economy continued to weaken even before last Tuesday. The building of new homes fell 6.9 percent to a seasonally adjusted annual rate of 1.527 million units last month, according to the Commerce Department.
Analysts said the declines weren't as significant as they appeared.
UBS Warburg analyst John Stanley said reports that a "sharp" drop in housing starts indicated the economy's last mainstay is crumbling are exaggerated. "A closer read of the numbers shows that essentially all of the decline came in the volatile multi-family segment that was up 13 percent the month before." The more important single-family segment was off just 2.4 percent, an insignificant amount, he added.
Internet content companies continued to be hit hard on an expected drop-off in advertising. Online travel agencies rose slightly after steep losses amid fears that air travel will drop off in the wake of last week's disaster.
Amazon.com rose 17 cents to $7.48. eBay fell $3.34, or 6.9 percent, to $44.99. CNET's Internet Etailer index slid almost 5 percent.
CNET's Internet Content index was down about 5.4 percent, with AOL Time Warner down $1.70 cents to $29.25 and Yahoo down 10 cents to $9.97.
Palm slid 36 cents to $2.15. The handheld device maker is releasing a new handheld along with its quarterly earnings, due out after the closing bell.