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Dow Jones Hits 5-Year Low Wednesday - 2002-10-09

U.S. stocks continued their downward slide Wednesday as the Dow Jones Industrial average hit a five-year low.

The Dow Jones Industrial Average fell 215 points to close down 2.87 percent at 7,286. The broader Standard and Poor's 500 Index ended the day down 2.73 percent. And the technology-heavy NASDAQ composite index lost 15 points, or 1.33 percent.

Wall Street analysts say it is the longest ongoing decline in U.S. markets since the late 1930s. They say corporate accounting scandals, shareholder lawsuits and negative forecasts concerning corporate profits are fueling the downward spiral.

Bill Meade of RBC Capital Markets says investors are still doubtful about the profit statements companies are reporting. "What the market is showing us is that there seems to be a phenomenon by which no one is believed in the current environment," he said. "Until you have definitive proof when these companies report, why should we believe anyone? There is the issue."

Many on Wall Street think an overall negative scenario is pushing down stocks as investors shy away from all equity markets. Barton Biggs, a strategist with the investment banking firm Morgan Stanley, advises buying stocks in the hardest hit market sectors. "If I had to pick two groups, I would pick the pharmaceutical stocks because I really believe they are great growth companies that are being misappraised here in terms of the gloom and doom about their growth prospects over the next couple of years," he said. "And I would pick the financial service companies and the banks because if the market turns, all of those stocks are going to have an immense move."

Established corporate giants like General Electric and the Ford Motor Company were among the losers.