Nasdaq sinks to five-month low

End-of-quarter selling and growing uneasiness about the US economy sent stocks sliding on Wall Street today, with Caterpillar and other industrials depressing blue chips and technology issues dragging the Nasdaq composite index to a five-month low.

Analysts blamed the selling on portfolio managers looking to unload poor performing stocks before the end of the quarter on Thursday.

Investors were also nervously awaiting two key economic reports due on Friday, including the Labour Department’s March employment figures and the Institute for Supply Management’s monthly report on the industrial sector.

Investors discounted the latest reading of the Conference Board’s Consumer Confidence Index, which showed a larger-than-expected drop in confidence for March.

The index reading came in at 102.4, less than the 103 forecast from Wall Street and the 104 reading in February.

“To some extent, we can expect to be pretty trendless until Friday,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.

“There’s nervousness, you have people tip-toeing around, and nobody’s really getting into the market in any meaningful way.”

The Dow Jones industrial average fell 79.95, or 0.8%, to 10,405.70, its lowest close since January 24.

Broader stock indicators also gave ground. The Standard & Poor’s 500 index was down 8.92, or 0.8%, at 1,165.36, also the worst showing since January 24.

The Nasdaq composite index lost 18.64, or 0.9%, to 1,973.88, the worst close for the index since Oct. 27.

Crude oil prices rose in afternoon trading, with a barrel of light crude settling at US$54.23 (€41.92), up 18 cents, on the New York Mercantile Exchange.

Bonds recovered from Monday’s selling, with the yield on the 10-year Treasury note falling to 4.58% from 4.64% late on Monday. The dollar was mixed against other currencies, while gold prices rose.

Financial stocks and consumer staples led advancers in the stock market, while industrials and consumer discretionary stocks fell on fears that consumers would be more cautious this year. Rising energy prices was also a factor in the selling today, as they have been all month.

“We’ve been in kind of a downward trend overall this year, and there’s nothing real positive that I can see to shake us out of it,” said Brian Bruce, director of global investments at PanAgora Asset Management Inc.

“It’s going to take a number of positive things, from both an economic and individual company basis, for the market to get some momentum and enthusiasm going.”

Caterpillar led the decliners on the Dow, tumbling 4.42 to 89.80 after a Morgan Stanley analyst said the stock was fairly valued and urged investors to collect profits.

Wall Street watched closely as the latest move in the MCI-Verizon-Qwest merger battle unfolded. MCI rose 84 cents to 23.78 after it accepted Verizon Communications’ improved 7.6 billion offer, valued at 23.50 per share, including 8.75 in cash per share.

Verizon’s offer, which was increased by nearly 1bn, was still lower than Qwest Communications International’s 25.60 per share bid, but analysts said Verizon was a better match for the former WorldCom.

Verizon gained 14 cents to 34.86, while Qwest added 4 cents to 3.79.

Hewlett-Packard has settled on a new chief executive, according to The Wall Street Journal. NCR Corp CEO Mark Hurd, credited with turning NCR’s fortunes around, is reportedly H-P’s choice to replace former CEO Carly Fiorina. Hewlett-Packard climbed 1.99, or 10.1%, to 21.78 on the reports, while NCR tumbled 6.50, or 17.2%, to 31.40.

Dow Jones industrial component Pfizer dropped 59 cents to 25.64 after an Austrian court ruled that its patent on the cholesterol drug Lipitor was invalid.

The ruling could open up generic competition for the popular drug far earlier than Pfizer anticipated.

Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies was down 10.51, or 1.7%, at 604.61.