Wall Street: Tuesday close

SLOW sales at fast food giant

The Dow Jones Industrial Average, up 100 points in early trading, tumbled 172.63 points or 2% to 8207.55, its lowest since early August. The Nasdaq slid 15.94 points or 1.3% to 1259.94. A moment of silence was observed on the floor of the New York Stock Exchange to mark the anniversary of the first day's trading after the terrorist attacks of last 11 September. Since then, the Dow has fallen about 7% and the Nasdaq is down roughly 20%.

Analysts said the McDonald's profit warning and weak industrial production numbers underscored the struggle faced by US companies in trying to eke out higher profits in a sluggish economy.

McDonald's chairman and chief executive Jack Greenberg blamed advertising for some of the company's problems. 'In Europe, sales were weaker than expected, particularly in Germany where the economy continues to contract and in the UK, where retail sales have slowed,' he said. 'In addition, our marketing messages in these countries did not resonate as well with consumers as we had hoped.'

McDonald's shares dived $1.49 or 7% to $20.20, back to where they traded in 1996. The company announcement coincided with reports that the burger chain's new TV campaign will feature property developer Donald Trump.

Discount broker Charles Schwab, which has featured Sarah Ferguson in its ads, said it was cutting 1,800 jobs or 10% of its workforce because its customers were trading fewer shares. Schwab shares dropped 60 cents or 6% to $9.17.

Software maker Oracle, shed 25 cents or 2.7% to $9.03 and traded down to $8.43 in extended hours after reporting quarterly numbers shy of expectations. The tech sector deteriorated as the day wore on with Intel surrendering an early gain to close down 13 cents or 1% to $15.57. Hewlett-Packard lost 30 cents or 2.2% to $13.35.

Latest economic data did not help sentiment. August industrial production fell 0.3%, the first decline this year and far below the 0.2% increase expected by economists. Jade Zelnik of Greenwich Capital Markets said it was 'particularly troublesome that output of business equipment slid for the second consecutive month following an upturn in the spring.

'On balance, the report continues to indicate a much more cautious stance on the part of businesses than consumers - a divergence that cannot be sustained indefinitely.'

News that Iraq had moved to defuse its confrontation with President Bush helped investors' mood early, but the news weighed on sectors that had moved up recently in anticipation of military action. ExxonMobil fell $1.33 cents or 4% to $33.07 on easing oil prices and defence equipment maker United Technologies was marked down $1.65 or 3% to $58.15.

AOL TimeWarner fell nine cents or 0.7% to $12.58 on reports that chairman Steve Case might be pushed aside as the company moves away from the internet and back it toward traditional media business.

An after-the-bell profit caution from JP MorganChase could weigh on sentiment today. JP Morgan shares closed down 16 cents or 0.7% to $21.55.