WorldCom Inc. shares set a one-day trading record and fell 13.8 percent Tuesday as Standard & Poor's dropped the troubled company's stock from its benchmark S&P 500 Index.
More than 550 million shares changed hands in regular trading _ about 10 times WorldCom's daily average volume _ as professional investors who manage index funds that mimic the S&P 500 rushed to sell millions of WorldCom shares.
The previous Nasdaq record was 303.7 million shares of Intel Corp. traded Sept. 22, 2000. The one-day New York Stock Exchange volume record: 339.7 shares of Enron Corp. on Nov. 28.
Standard & Poor's said it dropped WorldCom because the Clinton-based telecom was no longer representative of the sector.
"Once the stock got below $5 there was an increasing risk that something like this could happen,'' said Ramkrishna Kasargod, an analyst with Morgan Keegan & Co. in Memphis. "This just adds another bout of selling pressure.''
WorldCom stock, which has lost more than 90 percent of its value this year, tumbled 20 cents to close at $1.24 on the Nasdaq Stock Market. The stock had fallen as low as $1.08 earlier.
WorldCom spokesman Brad Burns said S&P's decision to replace WorldCom with Apollo Group Inc. on the S&P 500 "has absolutely no impact on our customers or our liquidity.''
The switch took place after the markets closed Tuesday.
Last week, after S&P, Moody's and Fitch downgraded WorldCom's bond ratings to junk status, new chief executive John Sidgmore downplayed worries about liquidity but admitted some customers were nervous about the company's tenuous financial condition.
WorldCom is dealing with concerns about its ability to repay $30 billion in debt and a Securities and Exchange Commission investigation into lending and accounting practices.
WorldCom has enough cash on hand to pay its debts through 2003. Analysts are worried the company may not be able to make payments in 2004 and beyond because debt will increase as the company's earnings drop.
Sidgmore is in the midst of a 30-day review of the company's assets, some of which are likely to be sold to raise cash. The company also is negotiating with banks to arrange billions in credit.