Stocks insist the glass is half empty
By Nicole Koffey
NEW YORK. 6:20 PM EDT—Even though the inflation fears were put to rest, a weak dollar knocked the wind out of an early stock market rally. Reacting sharply to a dramatic rise in the yen versus the dollar, the technology-heavy Nasdaq Composite Index fell almost 2% to 2814.17. The S&P 500 fell 1.37% to 1317. The Dow Jones Industrial Average fell 108 points to 10,801.42, as the yen rose to a 44-month high against the dollar.
Despite a small rally earlier today, the market refused to accept the notion of a cooling economy. In lieu of a doomsday CPI figure, investors focused instead on the danger of a weakened currency. Although the dollar's valuation has more to do with the changing economics behind the yen, investors fear that it is a serious sign of inflation.
In the ensuing sell-off, the losers beat winners, with more than 784 million shares changing hands on the big-board. Lately the market has been losing its breadth, with losers outnumbering winners on a consistent basis. Market analysts say that it is becoming a "stock pickers" market, and easy gains are behind us.
Technology stocks on the whole declined, led primarily by Oracle (nasdaq: ORCL), which plummeted $2.75 to $42.69. There were some winners, however, such as CareInsite (nasdaq: CARI), which rose 7.2% to $54. The Internet-based health-care network has announced its intent to provide AOL (nyse: AOL) users with online health services. Drugstore.com (nasdaq: DSCM) rose 6% to $53.88. E-Net Inc. (nasdaq: ETEL) more than doubled to $6.38 in response to its agreement with IXC Communications (Nasdaq: IIXC) to use the Internet to make telephone calls. The new business will allow it to compete with Net2Phone Inc. (nasdaq: NTOP).
In the financial sector, Cowlitz Bancorp (nasdaq: CWLZ) rose 21% to $6.38. Cowlitz recently agreed to acquire Northern Bank of Commerce (nasdaq: NBOC) to enter the Portland, Ore, market. Merrill Lynch (nyse: MER) rose 2.3%. Cash America (nyse: PWN) rose 18% to $9.25 in response to plans to install 1,000 automated teller machines for InnoVentry.
Semiconductors faired relatively well in an otherwise depressed market. Galileo (Nasdaq: GALT) rose 6.9% to $58 after being reiterated a "strong buy'' by analyst Alex Gauna at Banc of America Securities. Kemet (nasdaq: KMET) rose or 3.7% to $30.06 and was reiterated "near-term buy'' by analyst Jerry H. Labowitz at Merrill Lynch & Co. NETsilicon (nasdaq: NSIL) rose 80% to $12.63 after selling 5.25 million common shares at a price of $7 in an initial public offering.
In the healthcare insurance sector, Aetna Inc. (nyse: AET) rose 3.9% to $76.56 after announcing that it received regulatory approval to begin marketing its new USAccess managed-care plan in Florida. Hartford Life (nyse: HLI) rose 3% to $43.63. Healtheon (nasdaq: HLTH) rose up 12% to $42.06. Healtheon and WebMD announced their intention yesterday to merge.
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