Wall Street report: Tuesday close

SKITTISH investors dumped Wall Street back into the red on signs that the market plunge is starting to ripple through the world's biggest economy.

The Dow Jones Industrial Average reversed a mid-session gain to drop 82.24 points or 1.1% to 7702.34. The selling was more severe in the tech-driven Nasdaq Index, which dived 53.60 points or 4.2% to 1229.05, its lowest level since April 1997 and a long way from its peak of 5048 of March 2000.

Art Hogan, chief market strategist at the investment firm Jeffries & Co. said: 'People don't trust corporate America and they don't trust Wall Street.'

Economists said ed other factors appeared to be at work, with indications that the market drop, which has wiped several thousand billion dollars from the value of shares traded in the US, might hitting consumers. Retail sales last week were said to be down substantially.

The point was driven home by a grim forecast from Novellus, which makes manufacturing equipment for semiconductor factories. Novellus blamed the market drop for companies delaying equipment purchases. Novellus shares fell $2.80 or 9% to $26.75.

For some weeks, economists have worried that the meltdown could spread through the economy, depressing consumer spending and possibly tipping the nation back into recession.

Other market-watchers cited a big drop in the market value of US and foreign banks exposed to struggling companies as another reason for caution.

Citigroup and JP Morgan, America's two biggest banks, were pressured again over allegations they had helped collapsed energy trader Enron portray loans as income and then tried to market the bookkeeping technique to other companies. Citigroup shares, down 11% on Monday, dived another $5.04 or 16% to $27. JP Morgan lost $4.44 or 18% to $20.08. The allegations, denied by the banks, are under investigation.

Foreign banks sharing the pain included Barclays, with its shares shedding $1.80 or 6.5% to $26.10.

Techs were clobbered late with Microsoft sold down $3.30 or 7% to $43.01.

Earlier in the day, it appeared that the likes of soap and toothpaste maker Colgate-Palmolive could provide some relief from the unrelenting gloom. The biggest sales gain in four years for Colgate-Palmolive reminded investors that some companies continue to raise profits and sales even in down markets - and lifted the Dow to an early advance. Colgate shares rose $1.89 or 4.2% to $47.20. The company credited stronger results in Europe, thanks to higher euro.

Procter & Gamble, which had recently reaffirmed its earnings targets, jumped $1.38 or 2% to $79.21. P&G's product mix includes detergents and cleaners Tide and Spic and Span, Pampers nappies and Charmin toilet paper.

3M, which makes Post-It notes and Scotch tape, added $2.76 or 2.5% to $111.76 after topping quarterly estimates on Monday. Razor blade maker Gillette played into the theme by posting improved earnings. Gillette shares jumped $1.71 or 7% to $30.91.

Quarterly results played a major role in stock movements again. Conglomerate Tyco International slumped $1.20 or 10% to $10.65 after it reported it had taken a $2.3bn charge in connection with its financial subsidiary CIT.

MGM, the Hollywood studio of James Bond and the Pink Panther, shed 91 cents or 9% to $9.44 after its results came in lower than expected. The studio recently released 'Windtalker,' a $100m feature which has disappointed at the box office.

More dismal news from telecoms equipment maker Lucent sent its shares tumbling 45 cents or 21% to $1.65. The company said it would cut another 7,000 jobs. Telcos remained weak after Monday's big sell-off on disappointing results from BellSouth. SBC shares stumbled $1.31 or 6% to $21.30. BellSouth dropped $1.80 or 6.5% to $26.10.