US stocks close down

An earnings and revenue warning from Juniper Networks helped send US technology stocks sharply lower today, as Wall Street worried that the recent rally might have been premature.

The demise of a much anticipated economic stimulus package in Congress intensified the market’s skittishness.

The Dow Jones industrial average closed down 85.31, or 0.8%, at 9,985.18.

Broader indicators also tumbled. The technology-focused Nasdaq fell 64.37, or 3.2%, to 1,918.52, while the Standard & Poor’s 500 index dropped 9.63, or 0.8%, to 1,139.93.

Congress’s failure to pass a significant unemployment and business aid package raised further doubts about Wall Street’s hopes of a mid-2002 recovery. Even with 11 interest rate cuts this year, many economists were counting on this additional government help to restart the ailing economy.

In trading, networking equipment maker Juniper fell dlrs 4.05 to dlrs 18.88 after reducing its fourth quarter outlook because of increasing caution among its customers.

The selling spread to other technology issues, which were already under pressure from profit-taking and fears a turnaround would take longer than expected. Rival Cisco Systems dropped dlrs 1.06 to dlrs 18.29, while bellwether Intel slipped dlrs 1.07 to dlrs 31.98.

Retail stocks fared better, helped by a Merrill Lynch research note suggesting the worst might soon be over for the beleaguered industry. JC Penney rose 27 cents to dlrs 25.00 after the brokerage upgraded the department store to ‘‘strong buy’’ from ‘‘buy’’.

Since rebounding from its post-September 11 lows, the market has been trapped in a trading range. For the last month, the Dow has hovered around 10,000, while the Nasdaq has fluctuated near the 2,000 level. Analysts say investors are hesitant to make big commitments until there are firmer signs that corporate profits are stabilising and business is improving.

Economic data overall has been mixed, although there was some good news today. The Labour Department reported that fewer Americans filed new claims for unemployment insurance, the third weekly decline in a row, raising the hope that the layoffs hitting workers after the terror attacks is abating.

Many analysts are predicting a stronger market in 2002, but they caution that any progress will come gradually and choppily, at best.

Trading volume is expected to drop during the holidays, but the market could be volatile tomorrow because of what is called a ‘‘triple witching’’ session the quarterly expiration of index futures and index and stock options. Historically, triple witching weeks are volatile as fund managers sell and buy stocks to adjust their portfolios.

Declining issues led advancers 4 to 3 on the New York Stock Exchange. Volume totalled 1.42 billion shares, compared with 1.44 billion at the same point on Wednesday.

The Russell 2000 index of smaller companies lost 7.99 to 474.08.