Steve Quayle News Alerts

September 12, 2002

Stocks sagged Thursday as prepared remarks from Federal Reserve Chairman Alan Greenspan and a surprise rise in weekly jobless claims aggravated worries over the economy.

In late morning trading Thursday, the blue-chip Dow Jones industrial average was down 150 points at 8,430 while the technology-packed Nasdaq Composite Index was down 26 points at 1,289 The broader Standard & Poor's 500 Index was down 15 points at 894.

Investors were also watching President Bush tell the U.N. General Assembly that "action will be unavoidable" against Iraq unless the United Nations enforces resolutions requiring Baghdad to disarm. The specter of a U.S. strike against Iraq in the oil-rich Gulf has kept pressure on the stock market in past weeks.

The number of Americans signing up for state unemployment benefits last week rose unexpectedly to the highest level in more than four months, the government said in a report before the market opened, showing a weakened labor market as the economy crawls into recovery.

Greenspan did little to brighten the mood. He said in the advance copy of his speech that the U.S. economy so far has withstood the blows from falling stock markets, lower investment and the Sept. 11 attacks well, but warned that a return to spending discipline was vital for economic health.

"(It) seems like he's tilting toward a realization that the economy remains weak," said Tim Ghriskey, senior partner at Ghriskey Capital Partners LLC. "They signaled last time in August that while they're not ready to lower rates, there's still weakness out there."

McDonald's Corp. (MCD) fell $1.24, or more than 5 percent, to $20.10, ranking as the largest percentage loser on the Dow. Goldman Sachs suggested investors stay on sidelines as uncertainties for the fast-food giant remain high. McDonald's is slated to give a mid-quarter update next week as its stock flounders at multiyear lows.

Electronic component maker Molex Inc. (MOLX) tumbled $2.51, or more than 8 percent, to $26.15. Credit Suisse First Boston cut its rating on the company to "underperform" from "outperform, citing a slow down in the personal computer market.

UST Inc. (UST) sank $3.62, or more than 10 percent, to $29.76. The company cut its earnings forecast for the second half of the year due to sluggish sales volume growth at its largest unit, smokeless tobacco maker U.S. Smokeless Tobacco Co.

Trading in shares of troubled conglomerate Tyco International Ltd. (TYC) had been halted for news pending and not yet opened. The Securities and Exchange Commission charged former Tyco's chief executive Dennis Kozlowski and two other former executives with failing to disclose millions of dollars in secret corporate loans.

Declining issues outnumbered advancers 3 to 1 on the New York Stock Exchange. Volume was light at 138 million shares.

The Russell 2000 index, which tracks smaller company stocks, fell 5.37, or 1.4 percent, to 388.00.

Overseas, Japan's Nikkei stock average finished higher 0.2 percent. In afternoon trading in Europe, Germany's DAX index was down 2.5 percent, France's CAC-40 fell 2.9 percent, and Britain's FTSE 100 declined 1.8 percent.

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