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Stocks Fall as Asia's Slump Weighs on Economic Growth

Strategic Insights

— 1 min read

Stocks plummeted Wednesday as fears of an economic slowdown in Asia, combined with disappointing earnings from Northwest Airlines, offset gains in the computer industry, fueled by Dell's strong quarterly earnings. The Dow Jones industrial average dropped by 21.37, or 0.3 percent, with J.P. Morgan & Co. leading the decline. Meanwhile, the Nasdaq composite index fell 12.43, or 0.7 percent, snapping a two-day winning streak.

Key Takeaways:

  • Stocks fell by 21.37 points, or 0.3 percent, on the Dow Jones industrial average, led by J.P. Morgan & Co.
  • The Nasdaq composite index dropped 12.43, or 0.7 percent, snapping a two-day winning streak.
  • Dell's strong earnings and stock split announcement boosted the company's shares, but other computer manufacturers, like Gateway Inc. and International Business Machines Corp., declined.
  • Northwest Airlines Corp. rescinded a 4 percent leisure fare increase, marking the sixth failed attempt to raise fares this year.
  • Analysts expect a steady economic growth, supported by low interest rates, to offset concerns about profit growth slowdown.
  • The earnings of the 30-year U.S. Treasury bond remained unchanged at 5.56 percent, near the record low of 5.50 percent set on Monday.

Statistics:

  • The Dow Jones industrial average fell by 21.37, or 0.3 percent.
  • The Nasdaq composite index dropped 12.43, or 0.7 percent.
  • Dell's shares soared 8.38 to 117.16.
  • Gateway Inc.'s shares rose 1.59 to 62.59.
  • International Business Machines Corp.'s shares increased 0.11 to 129.91.
  • The earnings of industry leaders rose 62 percent in the quarter.
  • Northwest Airlines Corp. failed to raise fares for the sixth time this year.

Sources:

  • "Stocks fall Wednesday as declines in companies exposed to Asia's slump, such as semiconductor makers and banks, offset gains in computer manufacturers sparked by Dell Computer Corp.'s earnings." (Source: The Wall Street Journal, date not specified)
  • "You have a tug of war right now" between investors who worry that profit growth is slowing and those who say low interest rates and steady economic growth will support profits, said Liz Ann Sonders, a money manager with Avatar Associates. (Source: Liz Ann Sonders, Avatar Associates, date not specified)
  • "Rates have taken a back seat to the earnings problem." (Source: Liz Ann Sonders, Avatar Associates, date not specified)

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