Wall St tumble gives local shares a shake

Big falls on Wall St pushed the New Zealand sharemarket down 1 per cent yesterday, but a weakening US dollar gave the struggling kiwi a 1c lift to 41.58USc - its highest level since September 28.

Stocks ended awash in red ink on Wall St after warnings of sluggish sales from high-tech high-flyers started shockwaves that drove the Nasdaq to a low for the year, in the second busiest trading day in the market's history.

The Nasdaq dropped 109 points, or 4 per cent, to 2597.93 - its ninth loss in 10 days. The Dow Jones industrial index fell 212.40 points, or 2 per cent, to 10,416.80.

Personal computer giant Gateway and chipmaker Altera said their fourth-quarter results would fall shy of estimates and sent already skittish investors heading for the exits.

The warnings deepened the market's fears - that a slowing US economy would pressure corporate earnings, smacking the Nasdaq market down for the fourth straight session this week.

"People are adjusting to lower revenues and equities expectations for 2001," said Donald Berdine, chief investment officer at PNC Advisers. "But there is no one to buy them on the other side. Why should you get in front of this freight train?"

The Gateway warning crushed hopes that the American shopper would come to the rescue with a Christmas holiday spending spree.

The latest economic indicator also pointed to a slowdown. The number of Americans applying for first-time jobless benefits has risen to its highest level in more than two years.

The closely watched four-week average, which irons out weekly fluctuations, increased six consecutive weeks to 343,000 claims in the November 25 week compared with 331,000 for the previous week.

That added further nervousness to the markets, sparking talk about whether the economy was heading for a hard or soft landing.

The technology sell-off helped consumer products and drug stocks during the US trading day as investors sought companies with more stable earnings in a more sluggish economic environment. But that was not enough to offset losses in some of the Dow Jones industrial average's tech components, which dragged the blue-chip gauge down.

Last month, the Nasdaq fell 23 per cent - the biggest monthly drop since stocks crashed in October 1987 and the index tumbled 27 per cent.

For the year, the Nasdaq has fallen 36 per cent, which would be the biggest annual loss in its 29-year history, passing 1974's 35 per cent fall.

In Japan, the "old economy" resisted the slide and rose 2 per cent, giving a lead to other Asian markets.

- REUTERS