Stocks Tumble During Mid-Week Session in US, Overseas
July 7, 2008 - 8:21 PM
(CNSNews.com) - Disappointing corporate earnings and potential increases in interest rates sent markets around the globe sharply lower in Wednesday trading.
All three major American indexes fell during the mid-week session. The Dow Jones industrial average dropped 149.40 points to end the day at 9,598.24, the Nasdaq Composite index lost 42.83 points to 1,898.07, and the Standard & Poor's 500 index retreated 15.67 points to 1,030.36.
The day's sell-off was begun by earnings reports that beat estimates but nevertheless were not strong enough to push the markets into positive territory.
Such was the case with Amazon.com, which said revenue for its current quarter will top expectations and revenue in 2004 will be in line with estimates. However, stock in the largest Internet retailer had more than tripled its value since the start of the year, and investors were hoping for a stronger forecast, so shares fell more than 6 percent.
Even J. P. Morgan Chase, the second-largest U.S. bank, lost 3.5 percent after the Dow company said its quarterly earnings rose sharply, helped by lower credit costs and higher fees from investment banking.
With companies that reported strong profits losing ground, those with weak earnings tumbled during the mid-week session.
Along these lines, Merck & Co., Inc., shed almost 6 percent after posting flat third-quarter earnings and announcing it would cut 4,400 jobs to reduce costs.
"I think traders are quick to take profits right now because what else is there that stocks can do for an encore in the short term?" Peter Green, an analyst at MKM Partners, asked CNN. "We're still in an uptrend, but the probability right now, from a technical standpoint, is that we're going to have a little more selling."
Elsewhere, a report from the Bank of England that interest rates could rise in the world's leading economies sent many overseas markets into negative territory. Germany's DAX index, France's CAC-40, Japan's Nikkei stock average and Britain's FTSE 100 all lost about 1.5 percent on Wednesday.
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