The Dow Jones industrial average plunged past the dreaded 10,000 mark today after four of the most famous names in American business turned in disappointing performances for the second quarter.
Wall Street insiders insist that 10,000 on the Dow is just a round number, with no statistical significance, but to investors on Main Street its a visible landmark on the rocky path the market has been following all year.
Dropping 88 points today, the Dow fell to 9,962.22. The Dow had dropped below 10,000 in May but otherwise has traded above that level since last November when the index broke through the 10,000 barrier on the way up. At that time the market was nearing the end of a nine-month rally that began with the index around the 7,500 level.
That rally made 2003 a banner year for the market, but since then traders have been waving the white flag -- surrendering to slowing economic growth and slipping corporate profits.
For this year, the Dow is now down 4.7 percent, the Standard & Poor's 500 stock index is off 2.3 percent and the Nasdaq Stock Market composite index has fallen 7.7 percent.
Today the S&P fell almost 11 points to 1,086.20 and the Nasdaq composite dropped almost 40 points to 1,849.09. On a percentage basis, the 2.1 percent drop in the Nasdaq was more significant than the 0.9 percent loss by the Dow, but its loss did not cross any numerical barrier.
By dropping below 10,000 the Dow reminded long-term investors that they haven't made a dime on the market's 30 most-watched stocks during the past five years. It was in the spring of 1999 that the Dow first broke into five-digit territory and after years of rallies and retreats, that is where it closed today.
The immediate cause was another batch of underwhelming earnings reports from major corporations, but the longer term issue for investors is whether the economy is strong enough for companies to generate the profits implied by today's stock prices.
The dead weight dragging down the Dow is fear that the economy's growth is slowing and so, too, the growth in corporate profits.
It's bad enough that many companies have reported second quarter earnings that fell short of what now look to be overly optimistic projections. Worse, companies are hinting that their earnings will slow further.
"We are paying more attention to the guidance than to the earnings," Arthur Hogan, chief market strategist for Jeffries & Co., told The Washington Post's Neil Irwin.
Today's culprits were a Who's Who of American business: Amazon.com, Miscrosoft, Maytag and Coca-Cola.
Today Maytag Corp., the nation's third largest appliance maker, reported a second quarter loss of $41.1 million and warned that for the year its earnings could be only about one-eighth as much as it made last year.
Amazon.com, the long-time darling of Internet investors, was jilted today after issuing disappointing sales and profits numbers. Amazon's revenues of $1.4 billion fell short of even the most cautious estimates, and profits came up a penny a share short of what was expected. Amazon stock dropped nearly 13 percent, its biggest loss in more than two years.
Coca-Cola shares fell for the seventh consecutive day after the company reported sales grew 4.7 percent, the smallest revenue increase in more than two years.
After Microsoft trimmed its earnings estimate today, the stock gave back most of what it had gained as the result of the announcement Tuesday that it will payout billions to shareholders over the next several months.