Disney dive hits blue chips

US BLUE CHIPS fell yesterday on a downgrade of media company Walt Disney's credit rating, a negative forecast from Wal-Mart and declines in technology, aerospace and defence.

Around 1:15pm ET, the Dow Jones industrial average lost 98.23 to 8,774.01. The Nasdaq composite fell 8.42 to 1,371.11. Earlier in the day it was down nearly twice as much. The Standard & Poor’s 500 index fell 6.64 to 934.22.

MKM Partners market analyst Peter Green said: “It’s more a lack of market participants rather than an onslaught of negative news. There’s not much incentive to get involved and so we’re just consolidating gains from the recent rally. The dollar has also turned lower after its early rise and that’s another factor.”

Walt Disney (DIS: down $0.23 to $16.60, Research, Estimates) was among the Dow’s biggest decliners. Ratings agency Fitch downgraded its credit rating, saying the rating outlook is negative and the move reflects weakness in key measures of cash-flow leverage as a result of higher debt from the October 2001 buy of Fox Family, as well as weakness at the ABC network and the firm’s parks and resorts.