Dow Takes Another Hit

Wall Street fell back into a deep slump on Tuesday as a stream of earnings warnings triggered another huge selloff on the blue-chip Dow Jones and the tech-heavy Nasdaq.

"When you get into a downtrend like this, the good days are the days you only go down a hundred and the bad days are the days you go down 300," said Larry Wachtel with Prudential Securities.

Indeed, the Dow closed down 292.22, or 3.0 percent, at 9,485.71on Tuesday, compounding a 100-point loss the day before.

The Standard & Poor's 500 index slid 39.47, or 3.4 percent, to 1,106.40. The Nasdaq was off 109.97, or 6.2 percent, at 1,673, putting it at its lowest point since October 1998.

Tuesday's declines showed Wall Street is still mired in the pessimism over earnings and the economy that dominated the month of March, sending the Dow briefly into bear market territory while also planting the broader S&P 500 squarely among the bears.

Now, any predictions that the economy would turn around in the summer have now been tossed out the window, reports CBS News Business Correspondent Anthony Mason. Corporate profits are what makes stocks go up and down, and many now believe profits won't begin to rebound before the end of the year.

Furthermore, the tensions in China gave Wall Street another reason to worry on Tuesday.

"There's been selling in companies that do business in China and just overall malaise relative to a confrontation with a major world power," said Wachtel.

And so, not even Federal Reserve Chairman Alan Greenspan's recent interest rate cuts have been able to lift the market's dark mood.

"The Fed has tightened or has eased on three occasions and we're still in the soup here, so we can't even count on the Fed," Wachtel added.

As for the tumbling stocks, Ariba slipped $2.00 to $4.44, a 31 percent decline, in a loss that began late Monday after the business transaction software company reduced its quarterly outlook and said it will cut 700 jobs because of a dropoff in sales. BroadVision, another provider of e-commerce to business, fell $1.53, or 34 percent, to $2.97 after lowering its quarterly expectations, citing sluggish demand.

These companies joined a variety of other companies, including high-tech concerns and blue chip stalwarts such as American Express and Procter & Gamble, that have warned of disappointing earnings this year.

"It's the continued earnings surprises on the downside," said Matt Brown, head of equity management for Wilmington Trust. "What hurts even more is the outlook right now there's no visibility as to when this economy is going to turn around."

Technology losses helped pull the Dow lower on Tuesday, as well. IBM fell $4.27 to $90.39, while Hewlett-Packard lost $1.51 to $27.41.

Investors also punished U.S. automakers, which reported domestic sales in March fell by 9 percent. That result was better than expected, but not good enough for Wall Street. General Motors droped $1.10 to $50.93.

Even Dow stocks usually popular with investors in uncertain economic times suffered. Philip Morris fell $1.68 to $44.51, while drug maker Merck slid $1.44 to $72.81.

Market watchers said the lack of any reason to buy was further depressing stocks. The Federal Reserve isn't expected to cut interest rates for another month and investors are worried stock prices will fall futher when earnings reports start coming out.

Then there is the issue of federal income taxes, which are due April 16.

"It's just seasonally a time where investment decreases in financial markets owing to the need of cash tax payment," said A.C. Moore, chief investment strategist for Dunvegan Associates.

Declining issues outnumbered advancers more than 3 to 1 on the New York Stock Exchange. The Russell 2000 index dropped 13.70 to 426.06.

Overseas, Japan's Nikkei stock average rose 1.4 percent. European markets were mainly lower, however. Germany's DAX index fell 3.6 percent, Britain's FT-SE 100 closed down 2.8 percent, and France's CAC-40 slipped nearly 4.0 percent.

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