Selloff Worsens on Wall Street [UPDATE: NASDAQ Closes Up!][Was MARKET MELTDOWN]

TheStreet ^ | 07/15/2002 | TheStreet Staff

[Lazamataz]

Stocks remained sharply lower Monday afternoon as Pfizer's (PFE:NYSE - news - commentary - research - analysis) takeover of Pharmacia (PHA:NYSE - news - commentary - research - analysis) wasn't enough to quell investor paranoia about corporate accounting.

A statement from President Bush that the economy was fundamentally strong wasn't helping either. The Dow Jones Industrial Average was recently down 296 points, or 3.4%, to 8389, while the Nasdaq was falling 25 points, or 1.8%, to 1349. The S&P 500 was behind by 30 points, or 3.3%, to 891, a level it hasn't seen since July 1997.

Worries about the financial health of U.S. corporations was also taking its toll on the dollar, which was diving against other major currencies. The greenback hit parity with the euro, the first time that has happened since February 2000, and dropped to a 17-month low against the Japanese yen.

U.S. stocks are coming off one of their worst weeks of the year. The Dow last week lost 695 points, or 7.4%, to close at 8684, while the S&P plunged through its Sept. 21 low of 965, falling 67 points to 921. In a trend that was continuing Monday, the Nasdaq fared somewhat better, sliding 75 points, or 5.2%, to 1373.

"The Nasdaq has already visited the lower levels," said Ray Hawkins, vice president of block trading at J.P. Morgan. "The Dow Jones Industrial Average is just catching up to it."

Dow financials Citigroup (C:NYSE - news - commentary - research - analysis) and J.P. Morgan (JPM:NYSE - news - commentary - research - analysis) were down after earnings from Bank of America (BAC:NYSE - news - commentary - research - analysis) and FleetBoston (FBF:NYSE - news - commentary - research - analysis) both included charges for exposure to Argentina.

Also, Johnson & Johnson (JNJ:NYSE - news - commentary - research - analysis) was off 9.7% at $45.63 after news of Pfizer's acquisition of Pharmacia.

Much of the selling has been blamed on continuing fears about corporate accounting practices. Investors had little reason to cheer up after word emerged over the weekend that WorldCom (WCOME:Nasdaq - news - commentary - research - analysis) executives had ignored internal pressure to fix the company's accounting as far back as April of 2000, and that Vice President Dick Cheney was aware of the bookkeeping at Halliburton (HAL:NYSE - news - commentary - research - analysis) that recently drew SEC scrutiny.

[Lazamataz]

DJIA down 339 and the vector is still negative.

[Lazamataz]

Dow down 347, all the way to 8337, and I predict DJIA 6000-7000 by August.

[smith288]

You must not be doing so well in the market, no sarcasm in your posts....

[Poohbah]

Hey, why stop there?

The Dow will go into negative numbers Real Soon Now. If you don't BUY LOTS OF GOLD RIGHT NOW, you will be shipped on a train to a brand-new SOYLENT GREEN factory that's just waiting to make Patriots into green wafers :o)

[Lazamataz]

I'm not in the market meaningfully, I obviously have a 401k but that is long-term money, not to be touched for 20 to 25 years. There I will continue to dollar-cost-average.

[cpprfld]

I am glad I sold most of my positions 2 weeks ago.

[tomakaze]

There was an economist gal on Stan Monteith's show who pretty much forecast all this.
the gist of it was basicly expect something similar to 1929 by the Fall if not sooner, and so far everythings going down pretty much the way she lined out for about the same reasons.
It was an interesting interview. (I'd be happy to post a link if anyone wants it.)

[Willie Green]

Dow down 347, all the way to 8337, and I predict DJIA 6000-7000 by August.

Juan Term Bush didn't bolster Wall Street's confidence much.

[A. Pole]

The greenback hit parity with the euro,

The euro is the name of the game. If European elites manage the coup of euro displacing the dollar as a world currency, this can be a disaster.

[Lazamataz]

The Dow will go into negative numbers Real Soon Now. If you don't BUY LOTS OF GOLD RIGHT NOW, you will be shipped on a train to a brand-new SOYLENT GREEN factory that's just waiting to make Patriots into green wafers :o)

Well, say what you want about the Gold Bugs, if you had been able to predict this and switch into gold around Jan 2000, your wealth would have been preserved.

[Republic]

President Bush certainly bolsters my trust. Glad to see the market drop as the house gets cleaned up. Nothing will make the corporations take heed faster than investment money disappearing. It hurts. But better now than later.

[RightWhale]

I predict DJIA 6000-7000 by August

I also see no reason for the DJIA to be above 3000-4000, but there is a lot of wishful thinking happening here. August should be a good month, possibly the calm before the storm. This fall, look out!

[Dog Gone]

The chart would lead me to think that we're going to test the September low this week and the question will be whether that is a support level.

[meandog]

"Hey Dubyah,
Take it from
me...don't let
this market
bother you. Come
November 2004
you'll be
as popular as
I was when
I was in the
White House
and running for
my second term..."

[Lazamataz]

I don't think the Great Depression is a likely result of this. I think this is more akin to one of the bear markets, like the one from the mid 60's to the mid 80's.

[Poohbah]

Well, say what you want about the Gold Bugs, if you had been able to predict this and switch into gold around Jan 2000, your wealth would have been preserved.

Actually, it'd just be collapsing more slowly.

Now, move into REAL ESTATE in January 2000, and you'd be farting through silk.

[bok]

Food and Ammo is the most important thing if the economy crashes and civilian chaos ensues.

[Semper Paratus]

A big sign of a market bottom is type of panic selling, similar to panic buying at the top.

There are some great bargains to be had, but the rub is which financial report can you trust?

[catch]

Ahem. Have been on vacay and this is my first opportunity to register in with something that has been uppermost on my mind that past couple of weeks: When is the President or someone "close to the White House" going to step up to the plate and point the finger at the Democrat leadership for totally undermining public confidence in the market with their continued brainless attacks on business?

I mean, how many companies are involved in these scandals? A half-dozen? And how many public companies are there in this country? Hundreds? Thousands?

Someone in authority needs to nail the Democrats' invective for what it is: cheerleading the apocalypse! Their attitude is that national recession and a devastated stock market are well worth the price of trying to get Dubya's poll numbers down a couple of points.

C'mon, guys, let's hear it!

[Lazamataz]

Actually, it'd just be collapsing more slowly.

How do you figure, if gold was priced at the high $200's in early 2000, and the low $300's now?