Jan. 18, 2006 — The world's stock markets were dealt a blow on Wednesday as a wave of earnings disappointments and some glitches at Japan's Nikkei forced share values lower.

Toyko's stock exchange — the world's second-largest after the New York Stock Eexchange — stopped trading at 2:40 local time, shaving 20 minutes off the trading day.

The exchange was brought to its knees by a technical problem; its systems couldn't handle a tidal wave of small sell orders. It was the first time in the Nikkei's 57-year history that trading in all stocks and bonds was halted.

For the second day in a row, the Tokyo exchange ended down almost 3 percent.

"The global reaction to this is more of a psychological response than a rational one," said Art Hogan, chief market analyst at Jeffries & Company. "People wake up and read whatever wire service they're going to read and realize that one of the major Asian markets was down by up to 6 percent overnight, and there are a number of tech earnings disappointments and it tends to cascade. Eventually you get a more rational response after people have time to come to terms with what is really happening."

Other global indexes followed Japan's lead, with Hong Kong's Hang Seng and Germany's DAX rolling back 1 percent. London's FTSE shed almost 0.5 percent.

U.S. Markets Struggle as Well

At midday U.S. markets had not been able to shake off the morning's bear market. The Dow and S&P 500 were both down by about 0.5 percent.

The Nasdaq composite was more than 1 percent lower, thanks to disappointing earnings results from tech heavyweights Intel and Yahoo.

Chipmaker Intel said it made 40 cents a share during the final three months of 2005, well below expectations of 43 cents. The company also said it expects lackluster results for the first part of this year, which will push shares more than 11 percent lower.

Yahoo gave Wall Street similar news, with lowered guidance for the first quarter and earnings below expectations. The company reported earnings of 16 cents a share, a penny lower than expectations. Shares had lost about 11 percent by noon.

But the gloom of the morning might well be replaced by an afternoon rally.

"When we've had company-specific disappointments like this over the past two years, we've seen buyers come in after the midday to snap up bargains," said Richard Suttmeier, chief market strategist at Joseph Stevens. "If that doesn't happen, it could be very bad. We could see the Dow at 10,500, which would be a blow less than a week after everyone was talking about tripping over 11,000."

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