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US Stocks Under Pressure Wednesday


U.S. stocks were under selling pressure on Wall Street Wednesday, as economic uncertainty drove investors back to the sidelines. The major averages closed lower after two days of gains.

The Dow Jones Industrial Average fell 92 points, one percent, to 8,567. The tech-weighted Nasdaq composite gave up 2.5 percent. The broader Standard and Poor's 500 index shed five points, about half a percent.

Construction equipment maker Caterpillar, a Dow component, put some pressure on the market. On Monday, an investment firm upgraded the stock, saying the industrial giant was in a good position to benefit from a rebound in manufacturing. On Wednesday, another investment firm downgraded Caterpillar because of lowered earnings estimates.

The semiconductor sector also suffered after a downgrade for leading chipmaker Intel.

Wall Street continues to deal with the financial toll stemming from the September 11 terrorist attack. Many experts now believe the U.S. ecnomy may not start to recover until the second half of next year.

Veteran market-watcher Art Cashin says fear, including concern over the possibility of more terrorist attacks, has turned investors cautious.

"The difficulty is there is no motivation to buy," he said. "People look around and say 'yes, that looks cheap, or whatever.' But as we can tell from the polls, people are concerned that we may hear again from those evil people [terrorists] and maybe another shoe would fall. For that reason there's hesitation."

Analysts say negative corporate news is also keeping investors on the sidelines. Companies are issuing earnings warnings and it appears there is more to come.

Micron Technology, which specializes in chips for personal computers, reported sales are way down. The third largest U.S. airline, Delta, announced plans to cut 13,000 jobs and reduce capacity.

Some analysts say a big problem for Wall Street right now is that many traders are taking a very short-term view of both the economy and the stock markets.

Alan Skrainka, chief market strategist for the Edward Jones investment firm, urges investors to look beyond the immediate crisis. Backed by history and perhaps a little faith, he says the United States has been in trouble many times before and managed to pull out of it economically sound.

"We've suffered setbacks before," he said. We've looked at 26 crisis events over the past 60 years. And each crisis event is different but the lessons are always the same. The market initially declines but then gets back on track because the U.S. economy long-term has been very resilient."

The Dow Industrials are down 10.8 percent since the September 11 attack. The Nasdaq has lost 13.6 percent - both indices this week recovering some lost ground from the massive sell-off on Wall Street last week.