Stocks slump after report on growth

/ Source: The Associated Press

Wall Street sank in volatile trading Thursday after the government confirmed that the last quarter of 2007 did indeed see a sharp economic slowdown. For the second straight session, the Dow Jones industrial average fell more than 100 points.

The technology sector was particularly weak after business software maker Oracle Corp. posted worse-than-expected fiscal third-quarter sales and issued a cautious forecast. Meanwhile, data suggesting that Google Inc.’s revenue from Internet users’ clicks could slow also raised worries about tech stocks.

Oracle fell $1.51, or 7.2 percent, to $19.43, and Google dropped $14.11, or 3.1 percent, to $444.08.

Financial stocks lost ground Thursday as well, with investors uncertain about what is in store for the economy and the troubled financial sector.

But the sense of panic that emanated from the near-collapse of Bear Stearns Cos. at the start of last week has lessened, observers say. The Federal Reserve on Thursday afternoon auctioned off $75 billion in credit to investment banks, whose demand was solid but not at the desperate levels some investors had feared.

“GDP was in line, so we’re still expanding, even though we’re expanding at a very small rate,” said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. “It’s definitely a different mind-set than it was two weeks ago. A lot of smart people are telling us to buy on the dips. I think we’ll be fine as long as there is not another Bear Stearns out there.”

According to preliminary calculations, the Dow Jones industrial average fell 120.40, or 0.97 percent, to 12,302.46.

Broader stock indicators also fell. The Standard & Poor’s 500 index declined 15.37, or 1.15 percent, to 1,325.76, and the technology-heavy Nasdaq composite index fell 43.53, or 1.87 percent, to 2,280.83.