Stocks were down across the board today, as profit warnings by bellwether companies -- this time chipmaker Intel Corp. -- prompted investors to flee the markets.
At 1 p.m., the Dow Jones industrial average was down 67.98 at 10,697.54. The technology-laden Nasdaq composite index dropped 109.72 to 3,719.15. Both indexes had been down more than 120 points in early trading. The Standard & Poor's 500 index declined 18.92 to 1,430.13.
The world's largest chipmaker announced after the close of Thursday's trading session that it expects third-quarter revenues to fall below earlier expectations.
It was the biggest drop ever for Intel, larger than its 19 percent plunge in the October 1987 stock-market crash. It was also Intel's busiest day ever, with more than 161 million shares trading by 11 a.m.
The news prompted analysts at half a dozen investment banks to lower their ratings on Intel's stock today, further fueling the atmosphere of panic among one of Wall Street's most widely held stocks. Shares of Intel were trading hands at breakneck speed on the Nasdaq stock market, with volume of 34 million shares just in the first hour -- just shy of its average daily volume of 38 million shares.
Shares were down $13.78, or 22 percent, to $47.70 in early trading.
Applied Materials, the biggest semiconductor-equipment maker, fell 5.38 to 68.13.
Advanced Micro Devices, Intel's main rival, fell 2.94 to 24.63 on the NYSE to 24.25. Texas Instruments, whose chips power two-thirds of the world's mobile telephones, lost 2.75 on the NYSE to 54.56. Micron Technology dropped 9 to 53.50 on the Big Board.
Other U.S. chipmakers and computer-related stocks declined with Intel. Dell, the world's biggest personal-computer maker, slid 3.94 to 34, and Microsoft, the largest software maker, fell 2 to 62.19.
"Profit warnings like this will force the whole market down," said Carsten Roemheld, who helps manage about $1.5 billion in U.S. stocks for Adig Investments in Frankfurt. "We hold Intel shares and were quite positive on the company, but we'll now have to think about this position."
Credence Systems slid 2.38 to 36.69; Nova Measuring Instruments lost 50 cents to 11; Photronics fell 1.25 to 23.69; Brooks Automation declined 2.44 to 40.50; and PRI Automation dropped 2.63 to 21.13.
General Motors lost 1.75 to 66.56. Financier Carl Icahn sold his entire stake in the world's largest automaker a month after GM said he intended to buy as much as 15 percent of the company, the New York Times reported, citing Icahn.
Liberate Technologies fell 1.19 to 27.94. The developer of video-game software said its fiscal first-quarter loss widened to 90 cents a share from 17 cents a year earlier as it spent more to develop programs that let people play interactive games on television.
Radio-broadcasting stocks declined after Deutsche Banc analyst Andrew Marcus cut ratings on companies that he said have a high level of debt and the potential to miss earnings expectations.
Marcus cut Entercom Communications Corp. and Radio One Inc. to "buy" from "strong buy," and he lowered Emmis Communications Corp., Citadel Communications Corp. and Beasley Broadcast Group Inc. to "buy" from "market perform."
Zomax Inc. dropped 8.38, or 48 percent, to 9. The maker of CD- ROMs for multimedia publishers said third-quarter profit will miss expectations because of slowing demand, higher materials costs and the euro's decline.
AmSouth Bancorp lost 2.44 to 14.13 after the bank holding company said it expects third-quarter operating earnings to fall short of estimates.
Entercom dropped 2.50 to 31.75, Radio One slipped 44 cents to 13.50, Emmis lost 1.31 to 26.94, Citadel fell 88 cents to 15.63 and Beasley fell 31 cent to 11.
Lockheed Martin lost 88 cents to 30.06 after Lehman Brothers Inc. analyst Joseph Campbell cut the world's largest defense contractor to "neutral" from "buy."
The sell-off in the United States mimicked actions overseas, where stock prices in both Asia and Europe slumped.
With third-quarter earnings season just a few weeks away and increasing signs that the U.S. economy is slowing, investors have been punishing stocks whose companies fail to meet their expectations.