US STOCKS TUMBLE; CPI WORRIES BUT DAY-TRADERS BLAMED
NEW YORK (MktNews) Momentum players pulled their positions Friday creating large air-pockets for many stocks especially among technologies. Dealers said margin calls have likely contributed to the declines and may pose further danger as the afternoon wears on.
No one wants to be long. This is the blow out of the lows, the capitulation of the dip-buyers, said Jay Suskind, director of trading at Ryan Beck & Co. Suskind said the higher-than-expected 0.7 percent rise in the consumer price index triggered the sell-off, but blamed the extent of the decline on a pullout by momentum players.
Michael Lyons, head of trading at Dean Witter, said an urgency among momentum players is responsible for the damage. Theyre bailing out at once. They take them down 2 points at a time and theres no questions asked. Theres nothing but air under the bids, he said.
At 1:05 p.m. ET, the Nasdaq was leveling off, down 197.59, at 3429.28. The index had been down as much as 301 points at 3375 during the session. It opened the week at 4446.45.
Despite lower P/Es, the Dow Industrials were not immune, down 360.28, or 3.3 percent, at 10563.27.
Dealers were not surprised that the losses hit on a Friday, when day-traders typically exit positions ahead of the weekend. They also pointed to the approaching April 15 tax deadline as a factor, as many investors and speculators alike need to raise cash for tax payments.
Strong earnings from Sun Microsystems, up 1 7/8 at 79 5/8 [SUNW], did little to stem the decline. Theyre running right over earnings now, said Lyons. Earnings announcements took a breather on the session with the release schedule to hit full stride next week, but few right now care. No ones thinking about Monday right now, said Lyons. Losers littered all sectors, especially financials as the CPI sparked a reversal of recent sector gains. American Express down 9 1/8 at 136 7/8 [AXP] and JP Morgan down 5 1/8 at 126 3/8 [JPM]. Among others, Microsoft down 3 7/8 at 75 3/8 [MSFT], Intel down 6 1/8 at 115 [INTC], Procter & Gamble down 3 at 66 [PG], and General Motors down 4 at 84 [GM]. |
