US stocks fall

Profit warnings from Ciena and Lucent Technologies, and news of more layoffs and deteriorating retail sales, unnerved Wall Street today and prompted heavy selling.

The spate of negative news indicated that parts of the US economy are likely to remain weak early in 2002, a disappointment to investors who have been buying stocks for weeks on increasing confidence of an impending economic recovery.

‘‘People want to see some less negative profit numbers, as well as the first sign that profits are going to return to positive in the foreseeable future,’’ said Ronald Hill, investment strategist at Brown Brothers Harriman & Co.

The Dow Jones industrial average closed down 128.36, or 1.3%, at 9,766.45.

The broader market, with a greater percentage of technology stocks than the Dow, suffered the most from the profit warnings. The Nasdaq composite index dropped 64.85, or 3.2%, to 1,946.53 and the Standard & Poor’s 500 index fell 17.69, or 1.6%, to 1,119.38.

But analysts added that today’s batch of discouraging reports do not mean the economy is not going to improve, and that investors should remember that a recovery takes time.

The market’s losses were widespread, with the sharpest declines coming from sectors that indicated business will remain tough into 2002.

Technology suffered from a first-quarter earnings warning from Ciena, along with an announcement of 1,700 job cuts by Applied Materials on Wednesday after the market closed. Today, networker Ciena slid almost 17%, down dlrs 3.03 at dlrs 14.94, and chip equipment maker Applied Materials fell dlrs 3.79 to dlrs 41.08.

Other networking and semiconductor stocks fell.

And telecommunications stocks declined on a first-quarter profit warning from Lucent, which plunged nearly 16%, down dlrs 1.21 at dlrs 6.52. Competitor Motorola stumbled 77 cents to dlrs 16.15.

Among blue chips, investors punished retailers following a Commerce Department report that retail sales plunged 3.7% in November. Best Buy fell dlrs 1.15 to dlrs 66.05, and Wal-Mart declined 97 cents to dlrs 53.36.

Aetna slipped 30 cents to dlrs 30.74 after the health care provider announced it was cutting 6,000 jobs, or 16% of its work force.

But there were some winners. United Technologies rose dlrs 1.15 to dlrs 60.65 and was the strongest Dow component after it raised its 2002 earnings projections.

There also was some positive economic news, but it failed to trigger much buying. The Labour Department reported that the number of Americans filing first-time claims for unemployment benefits fell by 86,000 last week, the biggest weekly decline in nine years.

A separate report showed wholesale prices fell for a second straight month, dropping 0.6% in November after a bigger 1.6% plunge in October.

Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange. Volume totalled 1.40 billion shares, compared with the 1.35 billion shares on Wednesday.

The Russell 2000 index, the barometer of smaller company stocks, fell 6.64, or 1.4%, to 468.67.