Tuesday, Dec. 31, 2002 | 10:07 a.m.
SUN WIRE REPORTS
U.S. stocks were poised to end the year down substantially from 2001. Prices fell today after an industry report showed an unexpected drop in consumer confidence, raising concern an economic recovery will falter.
Wal-Mart Stores Inc., the world's largest retailer, led today's decline.
"Enough things are not going well that consumer confidence would fall," said Peter Doyle, chief investment strategist at Kinetics Mutual Funds Inc., which manages $450 million. "People are starting to cut back" on spending.
The Standard & Poor's 500 Index slid 7.11, or 0.8 percent, to 872.28 as of 11:11 a.m. New York time today. Consumer and financial shares contributed half the loss. The Dow Jones Industrial Average lost 59.78, or 0.7 percent, to 8273.07. The Nasdaq Composite Index dropped 9.98, or 0.8 percent, to 1329.56.
For the year, the S&P 500 has dropped 24 percent and the Dow 17 percent. Both indexes are headed for their first three-year losing streaks since 1939-1941. The Nasdaq has shed 32 percent.
The S&P 500 and Dow are also set to record their worst Decembers since 1931. The S&P 500 has dropped 6.9 percent this month, while the Dow has lost 7 percent.
"We're all just waiting for the year to end," said Kevin Carey, who helps manage $2 billion at 1st Source Bank in South Bend, Indiana.
Concern that the U.S. will invade Iraq, that North Korea is restarting its nuclear weapons program and that terrorists may plan more attacks around the New Year's Eve festivities also deterred some investors.
"We're certainly entering the new year with a lot of trepidation, with respect to all kinds of different international scenarios," John Carey, who helps manage $5.4 billion at Pioneer Investment Management, told Bloomberg Television.
The Conference Board's consumer confidence index fell to 80.3 this month from a revised 84.9 in November. The reading was also just above a nine-year low of 79.6 in October. Economists surveyed by Bloomberg News had an average forecast of 86.0.
Some 268 million shares traded on the New York Stock Exchange, down 31 percent from two weeks ago. Five stocks fell for every four that rose on the Big Board while three declined for every two that advanced on the Nasdaq Stock Market.
Wal-Mart, whose December sales fell short of its forecast, dropped 45 cents to $50.19. Target Corp., the No. 2 U.S. discount retailer, dropped 61 cents to $29.39.
Of the 30 retailers included in the S&P 500, 24 fell.
While retailers recorded sales increase after the Christmas holiday, they are still set for their smallest holiday sales gain in more than 30 years. Bank of Tokyo expects November-December sales to increase 1.5 percent from a year earlier.
Financial stocks, which make up a fifth of the S&P 500, declined after the consumer confidence report. Citigroup Inc. slipped 35 cents to $34.90. Charge-card issuer American Express Co. lost $1.01 to $34.65.
Philip Morris Cos. fell $1.34 to $40.05. Morgan Stanley analyst David Adelman cut the biggest cigarette maker's 2003 earnings per share estimate to $4.65 from $4.75. He said the company had to spend more on marketing and promotions in order to gain market share.
Johnson & Johnson shed 35 cents to $53.43. The drugmaker said it paid $750 million in cash this month to fully fund its retirement plans. The payment won't affect its profit or debt rating, the company said in a filing with the U.S. Securities and Exchange Commission.
CompuDyne Corp. shed $1.44 to $5.84. The maker of security systems said fourth-quarter profit will be less than it expected because expenses rose for several projects. The current period will be "only nominally profitable," it said.
Kerr-McGee Corp. had its biggest drop since February 2000, sliding $2.80, or 6.1 percent, to $43.32. The fourth-largest independent oil and gas producer in the U.S. said writedowns of assets in the North Sea and the Gulf of Mexico will reduce fourth-quarter profit by $385 million.
Tyco International Ltd. rallied $1.60 to $16.95. The company, which has three former executives under indictment, said an internal review found no accounting errors that affect the current fiscal year's results.
International Business Machines Corp. rose $1.83 to $78.08. John Jones, a SoundView Technology Group analyst, said the biggest seller of computer services' fourth-quarter earnings would exceed analysts' average estimate of $1.36 a share because of a 4 percent increase in revenue from its services business. IBM reports on Jan. 16.
Overseas, Japan's Nikkei stock average finished 1.6 percent lower today. In afternoon trading in Europe, France's CAC-40 rose 1.8 percent, Britain's FTSE 100 gained 1 percent and Germany's DAX index climbed 1.9 percent.
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