Dow drops below 10,000

Wall Street skidded further today, sending the Dow Jones industrials back below 10,000 as disappointments from Microsoft and Amazon deepened investors’ dread of a second-half earnings slump.

All three indexes ended the week lower for the fourth week in a row, as investors sold stocks across all sectors and industries, with technology and consumer staples taking the brunt of the selloff. The tech-heavy Nasdaq composite index fell to its lowest point of the year.

The drop was triggered by lower-than-expected earnings from Microsoft – a rare miss that unnerved investors. And Wall Street saw Amazon.com’s lower-than-expected earnings and revenues as a potential sign that consumer spending was slowing.

Combined with economic data that has pointed to what Federal Reserve Chairman Alan Greenspan called a “soft spot” in the economic recovery, the week was a brutal one throughout the markets.

“You take the economic data over the last few weeks, which has been disappointing, and now all these negative earnings outlooks, and then you add in all the worries about energy prices, terrorism, Iraq, the elections – there’s a lot to worry about out there,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. ”It’s going to take a while for these issues to be resolved, and I think we’ll be stuck moving sideways to lower until then.”

The Dow Jones industrial average was down 88.11, or 0.9%, at 9,962.22. It was the first time the Dow closed below 10,000 since May 24.

Broader stock indicators were also sharply lower. The Nasdaq composite index dropped 39.97, or 2.1%, to 1,849.09, its lowest closing level in 2004. The Nasdaq is now 7.7% lower for the year.

The Standard & Poor’s 500 index was down 10.64, or 1%, at 1,086.20, just 2 points shy of low for the year.

For the week, the Dow and Nasdaq both fell 1.8%, while the S&P 500 was down 1.4%. It was the fourth straight down week for the Nasdaq, the fifth losing week for the Dow and the sixth for the S&P 500.

The market has been sinking steadily since early July, when a disappointing jobs report from the Labour Department ended hopes for a summer rally and also started giving investors severe doubt about the strength of the economy. Since then, other downbeat economic data and a series of surprisingly poor second-half earnings outlooks have taken the market lower and lower, although the majority of second-quarter results have surpassed estimates.

Still, many analysts noted today that with the major indexes near or below their year-to-date lows, the market has nonetheless managed to find a discernible bottom, and most expected the major indexes to trade in this lower range until enough time passes to assuage at least some of investors’ fears.

“We have to get past some of these milestones on the calendar – the conventions, the Olympics, the Fed meeting on August 10, even the elections - and we have to get through them unscathed,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group. “The market hasn’t broken through the bottoms set earlier this year because, when you look at it, we have very strong business fundamentals, and those will pick us up when the time comes.”

Days after announcing a 75 billion dividend and stock buyback plan, Microsoft slumped 97 cents to 28.03 in its first trading session after earnings were announced. Amazon.com plunged 5.84, or 13%, to 39.98 on its disappointing report.

Oilfield services company Halliburton fell 49 cents to 30.55 after it posted a loss for the quarter due to charges related to discontinued operations and asbestos-related litigation. Middle Eastern contracts pushed revenue higher, however, and the company beat estimates by a penny.

The Coca-Cola Co slumped 3.80 to 45.17 despite beating Wall Street expectations by a penny.

The soft drink maker said its international businesses were coming under increasing competitive pressure.

Xerox’s recovery continued apace in the second quarter, with the printer and copier manufacturer beating analysts’ estimates by 4 cents per share. Xerox was up 49 cents at 13.80.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume was very light.

The Russell 2000 index of smaller companies was down 7.30, or 1.3%, at 539.22.