Stocks end day in the red

NEW YORK, July 22 (UPI) -- The bears were out again Monday, with the financial markets continuing a steady downward descent, adding to last week's bloodbath.

Stock prices on the New York Stock Exchange and the Nasdaq Stock Market ended sharply lower Monday as disappointing earnings results combined with the WorldCom bankruptcy filing continued to weigh on investor sentiment.

The blue-chip Dow Jones industrial average, which plunged 390.23 points Friday, fell another 234.82 points, or 2.93 percent, to close at 7,784.44. The tech-heavy Nasdaq composite index, which sank 37.80 points in the previous session, dropped 36.60 points, or 2.77 percent, to close at 1,282.55.

The broader New York Stock Exchange composite index dropped 14.34 points to close at 441.33 while the Standard & Poor's 500 index lost 27.92 points to close at 819.83.

The American Stock Exchange composite index dropped 26.55 points to close at 789.37 while the Wilshire 5000 Index fell 257.47 points to close at 7,825.52.

Volume was 2.5 billion on the Big Board and 1.72 billion on the Nasdaq Stock Market.

Analysts said stocks fell into negative territory as jittery investors struggled to decide whether to continue with Friday's sell-off -- especially in the wake of WorldCom's decision to file for bankruptcy -- or look for bargains among the plethora of beaten-down sectors.

WorldCom's decision to file for Chapter 11 bankruptcy-court protection makes it the largest bankruptcy case in U.S. history.

The company's chief executive stood by the decision and said he plans to have candidates for reorganization in two weeks with no more layoffs planned.

Market experts said the mood shifted from bargain hunting but warned that the market's volatility knows no bounds.

Strategists are already turning more bearish on the longer-term health of the equities markets, with Lehman Brothers Chief Investment Strategist Jeffrey Applegate cutting his price targets on the S&P 500 to 1,075 from 1,200 and on the Dow, to 10,250 from 11,500.

Applegate also instituted 2003 year-end targets of 1,125 for the S&P 500 and 10,750 for the Dow.

The S&P 500 net earnings per share revisions index has fallen since April, suggesting that earnings momentum will be less brisk in the second half of this year, Applegate wrote in a note to clients.

Many Wall Street strategists pinned predictions that stocks would rise this year on expectations of a corporate profit recovery in the second half.

Meanwhile, Banc of America Securities strategist Tom McManus cut his 12-month target for the Standard & Poor's 500 Index to 1,000 from 1,150, saying that investors may assign a lower multiple -- expected value -- to an eventual rebound in corporate profits.

Stocks may not rise as much as expected when corporate profits recover because of accounting changes and more focus on moves to treat stock options as expenses, McManus wrote in a note to clients.

McManus also cut his target for the Dow Jones industrial average to 9,400 and for the Nasdaq Composite Index to 1,650.

Meanwhile, telecom issues came under pressure after BellSouth reported second-quarter earnings, before items of 53 cents a share, lower than Wall Street views of 57 cents.

Additionally, BellSouth reduced its 2002 guidance for the third time this year, projecting earnings and revenue below analysts' estimates.

The communications services company now expects full-year normalized earnings of $2.13 to $2.20 a share, well below its lowered April forecast of $2.36 to $2.43 a share.

Williams Cos. also pressured the market after it said it now expects a second quarter recurring loss of 35 cents to 40 cents a share, down from previous guidance for second-quarter recurring earnings of 20 cents to 25 cents a share.

For its reported results, which include non-recurring items, Williams estimates a second-quarter loss of 63 cents to 73 cents a share.

Citigroup also pressured the market on word that the National Association of Securities Dealers is preparing to take regulatory action against Citigroup's Salomon Smith Barney unit and its former telecommunications analyst Jack Grubman, according to The Wall Street Journal.

Also news that Citigroup arranged an unusual financing technique for Enron Corp. that enabled it to appear rich in cash is disheartening already wary investors.

Analysts said with so much uncertainty in the market, investors are leaning toward more defensive plays.

Meanwhile, U.S. Treasury prices rose. The 10-year bond added 18/32 its yield, which moves in the opposite direction of its price, slipped to 4.45 percent from 4.52 percent late Friday.

In Europe, stock prices ended sharply lower in active trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index dropped 188.1 points, or 4.59 percent, to 3,910.2. The German DAX index sank 196.96 points, or 5.06 percent, to 3,694.92 and the French CAC-40 index fell 174.35 points, or 5.25 percent, to 3,149.69.

Analysts said European stocks were pressured by Wall Street continued weakness.

Investor were also shaken by news that WorldCom filed for Chapter 11 bankruptcy protection on Sunday, crushed by debts of $41 billion.

Earlier in Asia, prices on the Tokyo Stock Exchange ended mixed, showing surprising resilience after an initial drop prompted by Friday's drop on Wall Street, one of the worst declines in recent memory.

Japan's blue-chip Nikkei Stock Average of 225 selective issues, which fell 295.90 points Friday, slipped a mere 13.35 points, or 0.1 percent, to 10,189.01, well above its worst level of the session of 9,982.24 posted soon after trading began. It marked the index's first drop below the psychologically important 10,000 level since Feb. 21.

The market opened the day on a sour note after the Dow Jones industrial average plunged 390 points, or 4.6 percent, Friday, while the Nasdaq dropped 2.8 percent.

But half an hour after the opening, the bears were chased back to the sidelines by large lot orders for Nikkei 225 futures, experts said. The buying in futures, the biggest factor for the Nikkei's sharp resilience, appeared to have come from operators of overseas hedge funds, domestic public pension funds and European pension funds, experts said.

WorldCom's filing for bankruptcy protection did not affect the market much, as the move was widely expected and the telecom carrier intends to continue operations.

Elsewhere in Asia, prices on the Hong Kong Stock Exchange fell to their lowest level in nine months, with technology, media and telecom stocks among the hardest hit after WorldCom filed for bankruptcy protection.

The blue-chip Hang Seng Index dropped 215.21 points, or 2.08 percent, to 10,110.25, partially recovering from a low of 10,080.12, a level not seen since late October last year.

Analysts said WorldCom's bankruptcy filing is likely to keep investors nervous about accounting practices at other large corporations.

Prices on the South Korean Stock Exchange ended sharply lower, pressured by weakness in technology shares. The Kospi Composite Index, which fell 19.23 points Friday, dropped another 33.72 points, or 4.47 percent, to 720.90.

Meanwhile, prices ended lower on the Taiwan Stock Exchange for the sixth consecutive session. The Weighted Index, which fell 80.19 points Friday, lost another 118.42 points, or 2.29 percent, to 5,043.50.

Elsewhere around the Pacific region, prices also ended lower on the Australian Stock Exchange, pressured by Friday's meltdown on Wall Street. The blue-chip All Ordinaries Index, which rose 41.50 points Friday, fell another 23.40 points, or 0.77 percent, to 3,034.60.