Late Fading Act Wins No Awards

A DEARTH OF BUYERS pushed blue-chip stocks below their March 1 close Monday, as a month that started with a lion?oar neared its end to the bleating of the lambs.

The Dow tumbled 146 points to 10281, while the Nasdaq dropped 38 to 1812. The S&P 500 retreated 16 to 1131 on a day that started slowly and slowly grew worse before the selling spiraled in the final hour. Techs, credit-card lenders, airlines and home builders rubbed elbows in the crowded doghouse. Gold miners and oil drillers held up best. Of the 30 Dow Industrials, 28 lost ground.

Auto maker Ford (F) fueled fears of a profitless recovery by sticking to its forecast of break-even results in 2002, even though it now expects the U.S. market to absorb a million more new vehicles than when it issued that forecast two months ago. "Either margins are disappointing and/or management is being conservative," noted Merrill Lynch analyst John Casesa. The stock backed up 4%.

Airlines fell after weakened carrier America West (AWA) set off a price war by lowering walk-up fares and eliminating restrictions requiring Saturday night stays. America West shares fell 5%.

Philip Morris (MO) was among the weakest blue chips, coughing up 3% after an Oregon jury ordered the tobacco maker to pay more than $150 million to the estate of a woman who died of lung cancer after smoking lower-tar cigarettes. The jury found merit in the claim that Philip Morris fraudulently represented its reduced-tar brand as less hazardous than full-tar counterparts. ?are disappointed that this is the fifth straight loss incurred by the industry on the West Coast, and that all of those losses resulted in sizable punitive damage awards,??ote Goldman Sachs analyst Marc Cohen.

McDonald?b> (MCD) continued to pay for its traditional profit warning on Friday, as J.P. Morgan downgraded the struggling fast-food chain. Like other brokerages, it questioned whether the company?002 sales forecast remains too optimistic. McDonald?hares slimmed down 2%.

Wall Street has little apparent appetite for another advance after starting March with a big rally. Instead, those money managers not taking a few days off are expected to play it safe ahead of the April earnings season. That?hen companies are likely to provide crucial clues about the pace of the expected rebound in corporate profits.

No such rebound is apparent so far at data-storage giant EMC (EMC), which stoked the tech selling with a 5% drop after several analysts cut their earnings estimates.

On the other hand, business is warming up for networking leader Cisco Systems (CSCO), argued Lehman Brothers, which detected an ?ick?? corporate information-technology spending. It also noted plenty of persistent hazards, from the cash-strapped telephone companies in the U.S. to the uncertain economic outlook for Europe and Asia. Still, U.S. enterprise spending that accounts for up to 40% of Cisco?evenues ? rebounded strongly from the somewhat depressed levels of February,??gued analyst Tim Luke. The stock still fell 2%.

Over at Salomon Smith Barney, they?beating the drum on behalf of six chip-equipment stocks, raising price targets for such industry leaders as Applied Materials (AMAT) and Novellus (NVLS). The note from analyst Glen Young touted ? price-appreciation potential??r the group as earnings expectations soar. Still, ?e consolidation is likely near-term,??ung warned. Shares of Novellus lost 1%, while Applied Materials stock slipped a bit less.

Consolidation is definitely in the cards for Applied Films (AFCO), a maker of equipment used to deposit thin layers of film on everything from flat displays to solar panels. The company expects to lose two cents to six cents on a pro-forma basis in the current quarter, instead of a profit of 11 cents a share analysts were expecting. Sales will also disappoint, as pricing pressures and capital-spending cuts by customers take their toll. The stock slumped 20%.

Shares of high-risk credit-card issuer Metris (MXT) fell harder, dropping 23% after the company disclosed higher-than-expected bad-debt charge-offs in an annual filing with securities regulators. Card balances rose, suggesting that the lender?truggling customers are sinking even deeper into debt

Traders barely blinked at a 2.8% drop in February?xisting-home sales from January?ecord-setting pace. The new rate, which works out to annualized sales of 5.88 million units, still topped expectations and so is unlikely to end worries about looming interest-rate hikes.

Even so, those numbers were helped by seasonal adjustments that tend to overstate economic activity during the winter, noted Raymond James strategist Jeffrey Saut. Like other skeptics of the recent stocks rally, he doubts the next bull market is at hand. ?h the current accounting concerns, petrified CEOs/CFOs, rising interest rates, a potential trade war, etc., we think price/earnings multiples will likely contract from here even if we are underestimating the earnings [and] economic rebound,??ut wrote in a note to clients.

Bond investors begged to differ, however, selling Treasurys and pushing yields even higher before relenting some once stocks dropped. The yield on the 10-year Treasury ended up little changed at 5.39%, while the two-year note yielded 3.68%, up from 3.67% at the end of last week.

The bond sell-off could shortly and temporarily reverse, predicted Merrill Lynch technical analyst Richard McCabe. ?ed on the precedent of the last four years, a spring rally in bonds would be perfectly consistent with a spring pullback in stocks,?? wrote