NEW YORK (AP) — New worries about terrorism and another disappointing tech outlook sent stocks falling sharply for a second straight session Wednesday, with technology stocks and the Nasdaq composite index bearing the brunt of the selling.
Wall Street's concerns about terrorism resurfaced with the broadcast of a videotape purportedly of Osama bin Laden; the broadcast, on the Arabic satellite channel Al-Jazeera, came one day before the second anniversary of the Sept. 11, 2001 terror attacks.
Meanwhile, Texas Instruments Inc. narrowed its third-quarter revenue estimate, cutting a penny off the high end, just a day after a disappointing revenue outlook from Nokia Corp. prompted investors to turn cautious and lock in some gains from the market's recent advance. Still, Wall Street had room to pull back after seeing its major stock gauges climb for four weeks running.
"The market was ripe for a selloff. Obviously, Texas Instruments is helping that selloff to accelerate," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. "But I don't think it is the beginning of significant pullback. I just think it is a little drop here."
The tech-dominated Nasdaq closed down 49.62, or 2.7 percent, at 1,823.81, having shed 15.19 on Tuesday. The last time the Nasdaq had a bigger one-day loss was nearly two months ago, on July 17 when it forfeited 49.95, or 2.9 percent.
The market's other major gauges also retreated. The Dow Jones industrial average fell 86.74, or 0.9 percent, to 9,420.46, following the previous session's loss of 79.09. The Standard & Poor's 500 index fell 12.25, or 1.2 percent, to 1,010.92, after losing 8.47 Tuesday.
Wall Street was jittery ahead of the second anniversary of the Sept. 11 attacks. That tension increased Wednesday afternoon after Al-Jazeera aired footage of bin Laden and his deputy, which the broadcaster said was made in late April or early May. An accompanying audiotape attributed to the deputy, Ayman al-Zawahri, summoned Iraq guerillas to "bury" U.S. troops in Iraq.
The nervousness prompted investors to cash in profits. Stocks been rallying for the last month on better-than-expected second-quarter earnings and surprisingly strong economic data, boosting investors hopes about the second half of 2003.
Many analysts say a further retreat can be expected. Wall Street faces some hurdles, including rising interest rates and a jobless economic recovery, that threaten its upward momentum.
Disappointing high-tech earnings forecasts contributed to Wednesday's decline.
Texas Instruments fell $1.90 to $23.42 after shaving a penny off the high-end and low-end of its third-quarter earnings estimate. Nokia, meanwhile, fell 59 cents to $15.39 the day after its downbeat revenue outlook inspired investors to collect some profits. On Wednesday, UBS Warburg cut its rating on the cell phone maker to "neutral" from "buy."
The market "has had such a strong run that (stocks) are pulling back. It really did start with Nokia," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.
Dunay added: "If companies can't generate strong revenues it is going to be hard for profits to grow. They can't keep cutting costs. ... It has to translate into stronger earnings to justify the movement we've had in the market. You need big growth to go from here. You can't just kind of get by."
National City Corp. fell $1.51 to $30.30 after the bank holding company said its 2003 earnings will miss analysts' expectations, due in part to a drop off in mortgage refinancing in the face of rising interest rates.
Brokerage house downgrades pulled other stocks lower. Micron Technology Inc. dropped $1.35 to $13.35 after Soundview Technology lowered its rating on the semiconductor maker to "neutral" from "outperform."
Juniper Networks Inc. declined 94 cents to $16.55 after Smith Barney downgraded it to "in-line" from "outperform."
Declining issues outnumbered advancers about 5 to 2 on the New York Stock Exchange. Consolidated volume totaled 2.03 billion shares, up from 1.88 billion on Tuesday.
The Russell 2000 index, the barometer of smaller company stocks, fell 11.81, or 2.3 percent, to 501.76.
Overseas, Japan's Nikkei stock average finished Wednesday down 0.6 percent. In Europe, France's CAC-40 fell 1.4 percent, Britain's FTSE 100 declined 0.3 percent and Germany's DAX index lost 1.6 percent.
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