U.S. stocks sank lower as end-of-quarter portfolio adjustments, concerns over an escalation of the Kosovo crisis, and sagging bond prices led to a selloff Wednesday.
The Dow Jones Industrial Average declined 127.10 points, or 1.3 percent, to 9,786.16. The Nasdaq Composite sank 18.57 points, or 0.7 percent, to 2,461.72.
Philip Morris (MO) was the heaviest weight on the Dow, falling 2 1/2 to 35 1/4. An Oregon jury slapped the tobacco and food monolith with an $80 million judgment in the death of a long-time smoker.
"This weakness is linked to money managers window-dressing their portfolios," said Barry Hyman, senior market analyst at Ehrenkrantz King Nussbaum. "I don't see anything different other than what the end of a quarter usually represents."
Wednesday being the last day of the first quarter, money managers scrambled to make adjustments so that they can put their best face on quarterly statements sent to clients.
Concerns over an escalation in the Kosovo crisis also played a role in the market's wariness.
"I certainly don't think the Kosovo situation situation should be taken lightly," Hyman said.
A wire service operated by Agence France-Presse and the Financial Times Group reported that Russian Foreign Minister Igor Ivanov has accused the U.S. of preparing to send ground troops to Kosovo. Separately, Russian Defense Minister Igor Sergeyev said a Russian reconnaissance ship will head to the Mediterranean as soon as Friday, to be followed by seven more ships at a later date.
Thus far, the market has shown little reaction to the Kosovo crisis, save for a brief buying spree once the NATO military action commenced. However, many market observers believe the market might behave differently should NATO commit ground troops to the region.
"The stock market tends to ignore these conflicts early on, but as they get more in depth and the duration of the conflict looks a lot longer, I think the market will not ignore it," said Edward Wedbush, president of Wedbush Morgan Securities.
The technology sector, the leader for the entire session, closed with minor setbacks as a result of the late-day downdraft. Web stocks, after another impressive run for most of the day, gave back about three-fourths of their rises by the closing bell.
Otherwise, most other market segments landed in the minus column.
Late in Wednesday's session, CNBC reported that Yahoo! (YHOO) put the finishing touches on a deal to buy Broadcast.com (BCST) for about $4.4 billion. The deal is expected to be announced Thursday. Yahoo! stock dimmed 3 15/16 to 168 3/8, while Broadcast.com shares tacked on 4 13/16 to 118 3/16.
Elsewhere in cyberspace, a slew of stocks benefited from inclusion in Amazon.com's new Amazon.com Auctions service. Among them, Sportsman's Guide (SGDE) rose 1 1/16, or 18 percent, to 6 7/8, Global DirectMail (GML) 1 11/16 to 16 3/4, and Multiple Zones (MZON) 5 15/16 to 17 3/16.
Multex.com (MLTX) soaed 21 3/4, or 53 percent, to 62 1/2. The company will be the exclusive provider of brokerage research to America Online's Personal Finance Channel.
ZDNet (ZDZ) vaulted 17, or 89 percent, to 36 after the online unit of media and marketing concern Ziff-Davis (ZD) sold 10 million shares at $19 each in its initial public offering.
Elsewhere on the new-issue frontier, Priceline.com added 13 7/8 to 82 7/8. The online commerce specialist went public Tuesday at a price of $16.
In Wednesday's market indicators:
- The Standard & Poor's 500 Index fell 1.1 percent.
- New York Stock Exchange losers beat winners by 17 to 14.
- On the Big Board floor, volume surged 27 percent to 925 million shares.
- Advancing issues lagged decliners by 22 to 19 in the Nasdaq Stock Market.
- The Russell 2000 Index of small-capitalization stocks sank 0.3 percent.
Among the companies in the news:
- BP Amoco (BPA) fell 2 5/16 to 101 and Arco (ARC) dipped 1 1/2 to 73 1/8. The Wall Street Journal reported that BP's board okayed a buyout of Arco for as much as $27 billion.
- Etec Systems (ETEC) crumbled 13 11/16 to 29 7/16 after warning it won't come close to matching Wall Street forecasts with its fiscal third-quarter earnings estimate. It expects operating results of a dime a share vs. most projections of 26 cents per First Call Corp. The semiconductor manufacturer blamed an order slowdown for its grim outlook.
- Bed Bath & Beyond (BBBY) said it earned 24 cents a share in the fiscal fourth quarter, 2 cents more than the First Call Corp. poll of analysts had indicated. Sales at stores open a year or more grew 10.8 percent in the period. Stock of the home furnishings retailer was ahead 2 to 36 1/2.
- Tech Data (TECD) recorded fiscal fourth-quarter operating net of 64 cents a share. The First Call Corp. survey of analysts had expected 2 cents more. The computer products distributor earned 53 cents in the same period a year ago. The shares climbed 4 1/16 to 22 15/16.
- Nucor (NUE) said it's comfortable with the First Call Corp. first-quarter earnings estimate of 32 cents a share. The steel producer said product-dumping by overseas rivals at low prices was the major culprit in its inability to match the 74 cents of a year ago. The stock rose 1/4 to 44 1/16.
- LSI Logic (LSI) added 3 7/8 to 31 3/8 after Morgan Stanley Dean Witter upgraded the semiconductor maker to "strong buy" from "outperform." The broker sees the stock's price lifting to $50 in 12 months.
- Lucent Technologies (LU) advanced 7/8 to 108 after reaching a pact with Home Depot (HD) to provide equipment and software for 750 new stores. The five-year deal is valued at $175 million. Home Depot stock dropped 1 1/4 to 62 1/4.
- Verisign (VRSN) drove up 19 3/8 to 154 after the Internet security expert hatched plans for a two-for-one stock split. The shares have surged about 50 percent in March.
- PeopeSoft (PSFT) fell 15/16 to 14 5/8 after the developer of enterprise resource planning software steered analysts to expect first-quarter sales to be flat or just slightly above the year-ago tally. Customers are taking longer to decide on whether to buy PeopleSoft's product, the company said.