Market Ends Quarter With Sell-Off

Another batch of weak economic data and a profit warning from Sun Microsystems triggered renewed selling on Wall Street on Tuesday. Those same numbers fed a bond rally.

The technology-heavy Nasdaq composite index dropped 37.62 points, or 2.1%, to 1,786.94, while the blue-chip Dow Jones industrial average sank 105.18 points, or 1.1%, to 9,275.06.

The broader Standard & Poor’s 500 index shed 10.61 points, or 1.05%, to 995.97.

On the last day of the third quarter, profit taking was heavy in many of the technology stocks that had led the market higher in the period.

The sector was hit in part by Sun’s warning its fiscal first-quarter loss would be bigger than expected.

Sun shares sank 55 cents, or 14.3%, to $3.31. They had been as high as $5.58 in June.

Falling stocks outnumbered winners by 19 to 13 on Nasdaq, though losers had just a minor edge on the New York Stock Exchange.

A drop in the Conference Board’s consumer confidence index in September and a weaker-than-expected report on Chicago-area manufacturing deepened concerns that the economy might be slowing.

“The data did spook people,” Henry Herrmann, chief investment officer at Waddell & Reed.

Many investors are awaiting the government’s report on September employment, due Friday.

A poor employment report could boost prospects for another Federal Reserve rate cut, some analysts said. At a minimum, a weak report would imply that interest rates would stay down for an extended period.

That sentiment helped drive investors into bonds Tuesday. Buyers snatched up Treasury issues, sending prices up and yields down. The yield on the benchmark 10-year Treasury note fell to 3.94% from Monday’s close of 4.08%.

The two-year T-note fell to 1.46% from 1.6% on Monday.

Just a few weeks ago, many investors were shunning bonds and piling into stocks that would have the most to gain from a stronger economy.

In the third quarter, the leading stock sectors in the S&P; 500 included mining stocks, semiconductors, farm machinery makers and auto parts firms.

Among Tuesday’s market highlights:

* In the tech sector, Cisco Systems shed 61 cents to $19.59, Dell lost 81 cents to $33.42, and Intel was off 85 cents to $27.52.

Enterasys Networks lost $1.70 to $4. The maker of computer-networking equipment said sales in the third quarter ended Saturday fell as much as 13% from the second quarter’s $108.4 million as customers delayed purchases because of Hurricane Isabel. Enterasys said it may not meet its goal of profitability in the fourth quarter.

* Alcoa dropped $1.20 to $26.16, for the biggest decline in the Dow average. UBS said weak automotive demand and strong Australian and Canadian currencies would probably hurt earnings this quarter.

* ArvinMeritor fell $2.46 to $17.81. The world’s biggest maker of automotive exhaust systems forecast profit for its new fiscal year of $2.20 to $2.40 a share, short of the average analyst estimate of $2.67 a share.

* In Tokyo, the Nikkei index slid to a six-week closing low at 10,219.05, down 0.1%, after investors sold shares of Toyota and other automakers in the face of the yen’s recent rise. For the quarter, the Nikkei gained 12.5%.

* Gold ended at $385.40 an ounce in New York, up $3. It’s up from $346.30 on June 30.