Tobacco Companies Spur Slide

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Tobacco Companies Spur Slide

NEW YORK -- A two-day streak of investor optimism was snuffed out Friday by a profit warning from cigarette giant Philip Morris Tobacco Cos. Inc.

The Dow suffered its biggest loss in more than three weeks, plunging 295.67 points, almost 4 percent, to close at 7,701.45 -- levels not regularly seen since 1998. The Nasdaq slid 22.45, almost 2 percent, to 1,199.16. The session capped the fifth straight losing week, according to Dow Jones.

"The market has been in a state of psychological crisis for a while, and when the outlook for supposedly reliable companies took hits, it was the straw that broke the camel's back," Stanley Nabi, managing director at Credit Suisse Asset Management, told the news service.

Shares of cigarette giant Philip Morris, which manufactures category leader Marlboro, tanked 11 percent -- almost $5 a share -- after the company warned annual profit growth will fall short of projections.

Citing discounts and expensive promotions that are nonetheless failing to keep smokers from defecting to cheaper brands, the company said profits will rise between 3 percent and 5 percent this year, instead of the 9 percent previously forecast.

Number-two cigarette maker R.J. Reynolds Tobacco fell $6.39 to $40.16.