January 23, 2008 / 7:19 PM / 12 years ago

US STOCKS-Market extends slide a 6th day, led by Nasdaq

(Updates to mid-afternoon)

By Caroline Valetkevitch

NEW YORK, Jan 23 (Reuters) - U.S. stocks fell for a sixth session on Wednesday, led by the Nasdaq’s drop of more than 2 percent as profit forecasts from Apple Inc (AAPL.O) and Motorola MOT.N fanned worries about a recession and the outlook for tech.

For the second day, the Nasdaq crossed the threshold that signals a bear market.

By mid-afternoon, though, all three major indexes had sharply pared some of their earlier losses, with the financial sector providing a bright spot. The S&P financial index .GSPF was up 3.2 percent.

Energy stocks were among top decliners, including Exxon Mobil Corp. (XOM.N), down 3.5 percent at $79.58. Standard & Poors Equity Research said it had cut its energy sector outlook. The S&P energy sector index .GSPE was down 4 percent.

After Tuesday’s closing bell, Apple forecast a quarterly profit below analysts’ expectations and reported disappointing holiday-season iPod shipments. For details, see [ID:nN22551914]. Apple’s stock sank 15.3 percent to $131.80 on the Nasdaq.

“It’s a trend that’s been in existence for a while. It’s a concern of a recession, and the markets are going to move to a level that will start to discount a recession before it even apears,” said Steve Goldman, market strategist at Weeden & Co., in Greenwich, Connecticut. “When it starts to appear, it will be discounted.”

The Dow Jones industrial average .DJI was down 77.22 points, or 0.65 percent, at 11,893.97. The Standard & Poor's 500 Index .SPX was down 12.08 points, or 0.92 percent, at 1,298.42. The Nasdaq Composite Index .IXIC was down 49.94 points, or 2.18 percent, at 2,242.33.

Earlier, the Dow and S&P were down more than 2 percent each, while the Nasdaq had fallen more than 3 percent.

The news from Apple, Motorola and others underscored concerns about the health of the U.S. consumer.

Mobile phone maker Motorola Inc MOT.N forecast a loss for the current quarter and said it expects a challenging year.[ID:nN23603946]. Motorola shares lost 18.8 percent to $10 and ranked among the biggest percentage losers on the New York Stock Exchange.

On the plus side were financial companies, which gained for a second day after the Federal Reserve slashed interest rates by 75 basis points in an emergency move to forestall a recession.

Bank of America Corp (BAC.N) jumped 6.6 percent to $39.86 and was among the S&P 500’s top advancers, a day after reporting a 95 percent drop in its quarterly profit due to write-downs, trading losses and credit losses. The company, which owns the second-largest U.S. bank, however, also said it planned to raised capital in the near future.

The Nasdaq crossed the threshold of a bear market, which is defined as falling 20 percent or more from a recent closing high. But to confirm the onset of a bear cycle, a prolonged period in which investment prices fall, the index needs to end at least 20 percent off its closing peak.

Both the S&P 500 and Dow were also near bear market levels. (Editing by Jan Paschal)

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