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Home >> World
UPDATED: 11:09, March 01, 2006
Stocks drop on Google, economic growth concerns
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Stocks fell hard Tuesday after data showed signs of weakness in the economy and raised worries about the health of corporate profits, a concern exacerbated by Google's warning that growth was slowing.

The tech bellwether's shares suffered their second-worst one-day loss ever after Chief Financial Officer George Reyes said Google's (GOOG) key revenue source, Internet-search advertising, would see slower growth.. That spurred selling across the technology sector, with Google's stock dropping 7.1% to $362.62. Earlier, it fell as low as $338.51.

The market was already weak before Google started falling at midmorning. A slew of economic data, including readings on existing home sales, consumer confidence and Midwest business conditions, came in weaker than the market had been expecting, raising questions about the pace of economic and corporate profit growth.

"The combination of weak economic data with the warning by Google broke the upside momentum we've been seeing in both stocks and in the company and pushed the whole market down," said Jim Awad, chairman of Awad Asset Management, with $1.3 billion in stocks. "The market is recalibrating."

The Dow Jones industrial average closed down 104.14 points, or 0.9%, at 10,993.41. The Standard & Poor's 500 index lost 13.46 points, or 1%, to 1280.66. The Nasdaq composite index fell 25.79 points, or 1.1%, to 2281.39.

Tuesday's sell-off pushed the Dow below 11,000. Still, for the month of February, the blue-chip Dow average ended up 1.2%, while the S&P 500 was little changed, up 0.05%. The Nasdaq fell 1.1% this month.

Shares of Yahoo (YHOO), another Web search company and Google's main rival, fell 2.1%, or 68 cents, to $32.06 on Nasdaq, while shares of Chinese Web search company Baidu.com (BIDU) skidded 5.3%, or $2.88, to $51.42. Baidu has been referred to as "China's Google."

The biggest drag on the blue-chip Dow average was Boeing (BA), down 2%, or $1.44, at $72.69 on the NYSE. Australia announced it will buy long-range missiles from Boeing rival Lockheed Martin (LMT) for its strike aircraft. Shares of Lockheed slipped 1.6%, or $1.19, to $72.87, also on the NYSE.

Source: Agencies


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