Why You Can Trust CNET U.S. markets tumble
Wall Street stocks plunge with anticipated earnings disappointment and growing gloom about the global economy.
Worries about a slowdown in corporate earnings and a global recession drove technology stocks along with overall markets.
"It's a global meltdown in the equity markets, with fear of recession gripping the markets," said Peter Cardillo, director of research at Westfalia Investments. "We're setting up for another nasty day of declines."
The Dow Jones Industrial Average fell as much as 259.78 points today. The blue chip index closed down 210.09 points or 2.68 percent to 7,632.53. Today's drop comes on the heels of yesterday's 237.90-point fall.
On the first day of the year's last quarter, stocks were hit hard by the repercussions of poor corporate earnings warnings, and by growing disappointment that the Federal Reserve did not cut interest rates by more than a quarter percent.
The Nasdaq Composite Index fell as much as 87.23 points today. The technology-heavy index had an even bigger percentage plunge than the Dow, losing 81.49 points or 4.81 percent, to 1,612.35.
Technology stocks didn't escape today's battering, with Internet stocks falling across the board. Web portals Yahoo, Excite, Infoseek, and Lycos closed down 12.79 percent, 12.86 percent, 8.63 percent, and 12.2 percent, respectively.
Online giant America Online closed down 10.47 percent, while Web book and music retailer Amazon.com closed down 8.06 percent.
Morgan Stanley Dean Witter today downgraded book retailer Barnes & Noble to "outperform" from "strong buy." The shares were off 2.69, or 9.95 percent, to 24.32 in midday trading. They have traded as high as 48 and as low as 23.625 during the past 52 weeks. Whether the downgrade will have any impact on plans for the company's online subsidiary to be spun off for an IPO remains to be seen. Barnesandnoble.com filed with the Securities and Exchange Commission last week to go public.
Software giant Microsoft closed down 5.45 percent while Netscape Communications closed down 6.57 percent.
Telecommunications stocks were mixed, with the Baby Bells seeing some upside while long distance companies lagged. Bell Atlantic, US West, and SBC Communications were up .13 percent, .83 percent, and 2.11 percent, respectively. Long distance carriers AT&T and MCI WorldCom closed down 2.03 percent and 5.75 percent, respectively.
Many analysts expect the Dow to fall to 7,400, a level the index has neared many times before it rebounded.
Overseas, the Asian markets were slammed by a major selloff. Japan's Nikkei index hit a 12-year low, falling 1.56 percent to 13,197.12. Meanwhile, Germany's DAX tanked 5.54 percent to 4,226.49.
Reuters contributed to this report.