Stocks Reverse Early Gains

Sep 18 2001

Stocks reversed early gains Tuesday to close slightly lower as concerns over how quickly the American economy will recover from last week's terrorist attacks continued to weigh on investor sentiment.

Even coordinated interest rate cuts that followed Monday's cuts by the Federal Reserve, the European Central Bank and the Bank of Canada couldn't prompt enthusiasm for equities. Before trading began Tuesday, the central banks in Japan, the U.K. and Switzerland also lowered borrowing costs.

Technology shares, including big names like Cisco and Intel, slipped, while airlines, hard-hit in the wake of four nearly simultaneous hijackings and a nationwide grounding of commercial planes, held on to slim gains.

The Dow Jones Industrial Average fell 17.30, or 0.2 percent, 8,903.40, while the tech-heavy Nasdaq dropped 24.47, or 1.6 percent, to 1,555.08. The Standard & Poor's 500 fell 6.03, or 0.6 percent, to 1,032.74.

Big tech names, like router giant Cisco and chipmaker Intel, led the Nasdaq higher early in the day, but began falling in the afternoon. Cisco fell 38 cents, or 2.7 percent, to $13.62, while Intel dropped 12 cents, or 0.5 percent, to $23.47. Sun Microsystems fell 62 cents, or 6.3 percent, to $9.23. Dell, which pledged $3 million in donations to relief efforts in New York and Washington, fell 91 cents, or 4.4 percent, to $19.79.

Some big-name companies bucked the overall weakness. Software giant Microsoft rose $1.41, or 2.7 percent, to $54.32. Database leader Oracle rose 37 cents, or 3.4 percent, to $11.38 - even though it warned after Monday’s close that its earnings and revenue would be flat in its second fiscal quarter.

Airline issues, which lost a total of $10 billion in market capitalization Monday, rose as Congress mulled ways to aid the struggling sector. Airlines, already ailing before the terrorist attacks, have been losing money as flight schedules run well below normal levels and several say they may go bankrupt without help. The White House and Congress are working on a package that could total $24 billion in aid, loans and tax relief.

Delta rose $2.29, or 11.1 percent, to $22.93; AMR, the parent of American Airlines, rose $2.00, or 11.1 percent, to $20.00; Northwest rose 49 cents, or 4 percent, $12.91; and United, which reportedly might lay off as many as 20,000 employees, gained $1.49, or 8.5 percent, to $18.99. Continental fell $2.33, or 11.6 percent, to $17.72.

There was a small ray of hope from economic data released on Tuesday. The government said consumer prices rose just 0.1 percent in August, less than the 0.3 percent some economists had forecast. The lower-than-expected inflation news could give the Federal Reserve room to lower interest rates further without worrying about inflation.