Local stocks tumble in Wall Street sell-off

Trader Don Bright has watched most of the broad market gains from 2007 evaporate in the first few sessions of the new year.

He looks at bleak numbers for unemployment, the credit crunch and the weakening economy and sees no effective government response.

"They keep throwing Band-Aids at big flesh wounds, and it's not working," said Bright, a director at Bright Trading.

The Dow Jones industrial average on Friday fell 256.54, or 1.96 percent, to 12,800.18, while the Standard & Poor's 500 index fell 35.53, or 2.46 percent, to 1,411.63. The Nasdaq fell 98.03, or 3.77 percent, to 2,504.65, in part after an analyst's downgrade of Intel Corp.

Sellers also hammered local stocks. Shuffle Master plunged $1.02, or 9.24 percent, to close at $10.05 as investors prepared for the company's quarterly financial report Thursday.

Las Vegas Sands Corp.'s stock dropped 7.03 percent or $6.70 to $88.67 Friday.

MGM Mirage and Boyd Gaming Corp. both lost more than 6 percent of their market value. Morgan Joseph analyst Adam Steinberg reported that Boyd Gaming was running into tougher competition in Atlantic City with its Borgata property and in Michigan City, Ind., with the Blue Chip riverboat.

Investors seemed to be taking a cue from managers at MGM Mirage who have been selling the stock.

Robert Baldwin, CEO of subsidiary Mirage Resorts, pocketed $34.6 million from the sale of 383,000 shares in December.

Chairman and CEO Terry Lanni disclosed that he sold 50,000 shares of stock in December while Vice President Bruce Gephardt sold 7,800 shares and Executive Vice President Gary Jacobs unloaded 25,000 shares.

Sierra Health Services joined a short list of stocks with gains on Friday. Its shares climbed 35 cents or 0.82 percent as investors continued to wonder if UnitedHealth Group will win approval to buy the health insurance company for $2.6 billion.

The Bloomberg Las Vegas Index, which includes price-weighted shares of local companies, plunged 3.41 percent or 17.24 to 488.30 on Friday.

Woodrow Smith, president of the Las Vegas chapter of the American Association of Individual Investors, holds no local stocks in his portfolio, but he is suffering the pain of watching the value of his holdings shrink with the market downturn.

The stock market turned pessimistic when excessive optimism stopped being rewarded, he said.

Smith thinks investors are reacting to the kinds of problems he encountered with clients he advised at the Consumer Credit Counseling Services.

Consumers have been living beyond their means, buying houses they couldn't afford with adjustable-rate mortgages, buying new cars and running up credit card debt with abandon, he said.

"Wall Street is seeing that a lot of people were living way above their means," he said.

He met couples going through divorce but who were still living in the same house because they couldn't afford separate homes.

Smith expressed optimism that good companies will prevail and rebound.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.