Turmoil in world markets as IBM worries trigger sell-off in New York

Financial markets worldwide had a volatile day yesterday as Wall Street's Dow Jones Industrials index fell through the 10,000 level for the first time since March, taking London and other European stocks down with it.

Financial markets worldwide had a volatile day yesterday as Wall Street's Dow Jones Industrials index fell through the 10,000 level for the first time since March, taking London and other European stocks down with it.

Yesterday's gyrations saw the Dow plunging 420 points at its worst only to recover to just above 10,000 by mid-afternoon. The sell-off was prompted by a delayed reaction to disappointing figures from IBM, New York's bellwether stock.

In London, the FTSE 100 fell as much as 186 to hit a low of 6,017.2 before ending the day 55 points down at 6,148.2. Baltimore, the internet security company that is expected to announce a share placing today, led the roll call of UK stock market fallers with a drop of nearly 13 per cent. Freeserve, the Net service provider, and Logica were both off more than 10 per cent.

IBM's profits, which came out after the market close on Tuesday, were up 18 per cent - in line with analysts expectations. However, the mainframe manufacturer scaled back its revenue growth forecasts, triggering a 20 per cent fall in its stock price.

Market watchers said that IBM's downbeat comments added to recent investor worries that the boom in personal computer sales was stalling.

They said October was once again conforming to type as the month for jittery stock markets and unpredictable moves. Today is 13 years to the day since Black Monday when stock markets worldwide suffered falls of more than 20 per cent.

But the bears did not get it all their way yesterday. Positive surprises from Ford, the auto giant, and tech stocks EMC and STMicro, all three of which beat forecasts, encouraged Wall Street traders back into the market.

The decision by Sun Microsystems, manufacturer of Net servers, to publish its earnings during trading hours was another factor which helped stocks recover. Its 88 per cent jump in third-quarter earnings to $510m was also well ahead of Wall Street expectations. TimeWarner, the media giant, also beat forecasts with a 13 per cent rise in quarterly earnings.

Nevertheless, with New Economy trend-setters Microsoft and AOL due to report after the market close yesterday, overall sentiment remained nervous and the Dow was still off 162.4 mid-morning at 9,927.3. Nasdaq's technology composite index fell 136.06 points or 4.23 per cent before recovering to 3196.41, a fall of 17.55 or just over one half per cent by mid-afternoon.

With the Middle East crisis fading into the background, and many big US companies reporting third-quarter results, corporate earnings has taken over as main driver of investor behaviour. "Goldilocks is dead and the three bears are in the process of consuming her," Bill Meehan of Cantor Fitzgerald told CNN. A 26 per cent fall in profits at Chase Manhattan, the banking giant that is buying investment bank JP Morgan for $35bn, was among other factors contributing to US investors' low spirits.

The dollar slid against the yen, the Swiss franc and the pound, while falling US oil stocks pushed the oil price higher well.

Wall Street's early falls quickly filtered through to Europewhere techstocks were once again hit. Nokia, and Ericsson, the mobile phone producers whose stock was badly buffeted by last week's announcement that US rival Motorola was cutting its sales forecasts, were on the slide again yesterday. Both have third-quarter reports within the coming days.

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