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EDITIONS
Wednesday, 10 July, 2002, 23:55 GMT 00:55 UK
Dow plunges below 9,000
Shares traders selling as the markets fell
Accounting scandals have unsettled traders
The Dow Jones index of leading US shares has lost more than 3% as investors failed to recover their nerve after a string of corporate scandals.

The index fell below the symbolic 9,000 level early in the trading session, and experienced its largest one-day loss since September 2001.


This market has completely broken the spirit of investors

Al Mirman
V Finance
It finally closed down about 284 points at 8,811 points, pressured by news that telecoms firm Qwest is facing a criminal investigation.

The slump came a day after US President George W Bush pledged to take steps to deal with corporate malpractice,

Toward the end of the day, the selling accelerated, pushing the index well beyond reach of the 9,000 level.

The Dow last closed below 9,000 on 2 October. Before the attacks of 11 September, the Dow had not finished lower than 9,000 since December 1998, when it stood at 8,790.

Cheney under fire

President Bush had demanded longer jail sentences for corporate criminals in an effort to restore the public's faith in big business.

"We will use the full weight of the law to expose and root out corruption," he said on Tuesday.

Concerns over the accuracy of US corporate accounts have been weighing heavily on share prices, in the wake of revelations that energy giant Enron and telephone firm WorldCom had manipulated their financial statements.

Worries about corporate corruption increased after news of a private lawsuit brought against Vice-President Dick Cheney.

Mr Cheney headed the oil company Halliburton during 1995-2000, and the lawsuit alleged that the company had misreported $445m in revenues.

The Nasdaq tech index also ended lower, down 2.5% at 1346. The Nasdaq last closed lower in May 1997, at 1,341.24.

Qwest blues

News that public prosecutors in Denver had launched a criminal investigation into Qwest provided the catalyst for the latest share price decline.

The subject of the investigation has not yet been disclosed.

Qwest said it plans "to fully co-operate" with the investigation, but its shares still sank more than 41% at one point in the day.

The shares fell as low as $1.53 on the New York Stock Exchange, before closing down 83 cents at $1.77.

General disarray

Blue chip stocks were hurt by brokerage downgrades of car companies General Motors and Ford.

General Motors fell by $3.53 to $47.61, and Ford was down by $1.12 to $13.99.

Meanwhile, Philip Morris, Honeywell and American Express all shed more than a dollar.

Pharmaceuticals company Merck lost $2.18 to $43.57 after announcing it was postponing the initial public offering of its Medco unit for the third time.

"This market has completely broken the spirit of investors," said Al Mirman, strategist at V Finance in Florida.

"It is going to take a good year for investors' confidence to be reinstated."

However, a rating upgrade for Cisco Systems from Merrill Lynch offered some support for the tech sector.

Shares in Cisco rose 37 cents to $13.51.

Europe slips lower

Wall Street's woes also weighed on investor sentiment in London, where the benchmark FTSE 100 share index closed 2.7% lower.

Shares in Royal Dutch Shell took a hit after the company was removed from the Standard & Poor's index of 500 leading shares in the US.

It lost 4.6% in value, while Unilever, which was also ejected from the S&P index, shed 3.2%.

The re-shuffle by S&P was billed as a move to make the benchmark a purely US index.

On mainland Europe, the Paris Cac index also lost ground, closing 4.26% lower at 3,658.38.

In Frankfurt, the Dax shed more than 4% to close at 4,190.22.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Stephen Evans
"Pessimism reigns on Wall Street"
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
Launch marketwatch
View market data


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See also:

10 Jul 02 | Americas
10 Jul 02 | Business
10 Jul 02 | Business
10 Jul 02 | Business
26 Jun 02 | Business
26 Jun 02 | Business
25 Jun 02 | Business
24 Jun 02 | Business
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