Wall Street sank closer to its post-Sept. 11 lows Thursday, with more earnings warnings and a U.S. Supreme Court decision overshadowing the latest good economic news.
“There’s no confidence among investors, and it shows, because you get one up day and then you give it back again over the next couple,” said Robert Froehlich, chief investment strategist for Deutsche Asset Management. “Two years ago, everywhere you looked there was a reason to invest. Today, everywhere you look there is a reason not to invest.”
The Dow Jones industrial average closed down 129.80, at 9431.77, its lowest close since Nov. 2, when it ended at 9323.54. It was the Dow’s fourth triple-digit loss in the last eight sessions, and it has fallen 274.35 points the last two days.
The Nasdaq composite index lost 32.08, to 1464.75. The tech-heavy index last finished lower Sept. 27, when it stood at 1460.71. The Standard & Poor’s 500 index dropped 13.70, to 1006.29. That is its lowest close since Sept. 24, when it finished at 1003.45.
All three indexes hit new lows for the year. The Nasdaq is just 2.8 percent and the S&P 4.0 percent from reaching their post-attack low closes, while the Dow is 12.7 percent away. All three hit those lows Sept. 21.
The earnings warnings Thursday came from biotech firm Genzyme; Morgan Stanley, which lowered its investment rating for the entire auto industry; and Merrill Lynch, which reduced its earnings estimate for Walt Disney.
“The guidance coming from the corporate tape suggests we’re in for another difficult earnings season and there’s no catalyst for us to go higher,” said Joseph Dorilio, head of trading at investment firm ING Financial Markets.
Genzyme tumbled $6.17, or 23.8 percent, to $19.70, after reducing its quarterly and full-year earnings estimates. General Motors fell $2.59, to $53.75; Ford shed 75 cents, to $15.73; and DaimlerChrysler lost $1.17, to $43.98. Disney slid $1.30, or 6.2 percent, to $19.56.
Metro-Goldwyn-Mayer lost 57 cents, to $13.18, after saying late Wednesday that its second-quarter loss would be larger than expected.
ImClone also was a drag on the biotech sector. It slid $2.38, or nearly 21 percent, to $9.03, after saying federal regulators are considering taking action against the drugmaker for failing to accurately disclose information in December about an experimental cancer drug.
“Between the corporate malfeasance, lack of positives coming out of the Middle East and relenting disappointments on the earnings side, it’s hard for investors to be enthusiastic about putting fresh money into the market,” said Robert Cohen, head trader for Credit Suisse First Boston.
Shares of health maintenance organizations weakened after the Supreme Court upheld the right of patients to an independent review if an HMO refuses to pay a health insurance claim. The case involved a Chicago-area woman and Rush Prudential HMO, which was purchased by WellPoint Health Networks in 2000.
WellPoint shed $1.93, to $84.27. Other losers in the HMO field included UnitedHealth Group, off $1.16, to $96.14; Aetna, down 29 cents, to $51.47; Cigna, down $1.43, to $99.25; and Humana, off 33 cents, to $16.76.
But David Shove, managed health-care analyst at Prudential Securities, said the ruling, upholding health-care reform in effect in 40 states, was just a “slight negative. Financially, it is not that big of a deal.”
More violence in the Mideast added to jitters. “People are seeing tension building in the geopolitical situation,” said Dorilio. “You’ve had a lot going on for the past three days.”
Even a slightly higher-than-expected increase in the index of leading economic indicators, a key gauge of economic activity, failed to inspire any kind of a rally.
“Bulls just can’t win,” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. “What seems to be a good news story, like these leading economic indicators, is pretty much ignored because earnings and revenue have pretty much disappeared for the second half of the year. It’s just a very poor environment for investing.”
