Wall Street report: Monday close

A FIFTH straight day of negative economic news pushed the Dow to its third consecutive triple-digit drop and sent tech shares tumbling to near levels not seen since 1997.

The Dow Jones Industrial Average, which wilted late last week on fears that the economy is headed back into recession, dropped 269.50 points or 3.2% to 8043.63. The Dow has lost more than 700 points since Wednesday's close. The Nasdaq sank 41.91 points or 3.4% to 1206.01, its lowest level of the year.

Analysts said data pointed to a shrinking economy which would hurt profits and further undermine share prices. The latest blow came from the Institute of Supply Management's non-manufacturing index. The index, which covers roughly 80% of the world's biggest economy, fell to 53.1 in July, from 57.2 in June, below economists' expectations. That indicates that the biggest slice of the economy is barely growing - and may start contracting as early as this month.

The data stoked speculation that the next move by the US Federal Board will be to lower interest rates to try to boost the economy. Late last week investment firm Goldman Sachs, which just a month ago was tipping that the Fed would raise rates, said the US central bank might have to cut rates by year's end.

Official rates are already at 1.75%, the lowest since John F. Kennedy was in the White House. Even so, the promise offered by strong first-quarter growth has dissipated amid corporate accounting scandals and declining markets which have made executives cautious about spending and hiring.

Concern about companies' ability to maintain profitability was reflected in market reaction to results from Procter & Gamble, the consumer products giant that sells everything from toilet paper to toothpase. P&G reported a 6.1% sales increase in its latest quarter, but its shares fell $2.40 or 2.7% to $87.44.

Investors were wary of techs as well, with Cisco Systems falling 53 cents 4.5% to $11.36 on cautious broker comments ahead of quarterly results due today (Tuesday). Hewlett-Packard finished off 70 cents or 5.5% to $12.10. Intel, which suffered along with other semiconductor makers last week on a negative outlook for the industry, closed down 81 cents or 5% to $15.88.

Telecoms were pressured. SBC, the second biggest US local telephone company, sagged $1.45 or 5% to $26.10, AT&T eased 91 cents or 9.5% to $8.69 and Verizon Communications came off $1.83 or 5.7% to $30.15.

Financial services companies saw selling as well, possibly on concerns that their loans to South America could be less secure. Citigroup slid $2.23 or 7.2% to $28.65. JP Morgan headed lower by $1.50 or 6.3% to $23.35.

Walt Disney, which disappointed last week with its quarterly update, stumbled another $1.04 or 7% to $14.27. General Electric, the biggest company in the world by market value, came off $1.20 or 4% to $28.30.

One bright point among blue-chips was Philip Morris which jumped $2.29 or 5% to $47.50 on what was seen as favourable ruling in a California court case.