Jittery markets tumble on news of Nortel deal
James Baxter
The Ottawa Citizen
July 29, 2000
The Canadian Press / (Nortel Networks)
TORONTO -- Fears of an overheating U.S. economy joined with profit-taking and uncertainty over Nortel Network's latest acquisition plans to cause share prices to plunge on all major North American markets yesterday.
The Toronto Stock Exchange 300 Index, which started the week by soaring through the 11,000 mark in the first three minutes of trading Monday, plummeted for the second consecutive day, dropping 3.16 per cent to 10,343.
For the week, the TSE 300 was off 499 points, or 4.6 per cent.
Leading the fall was Nortel Networks, whose shares dropped $8.15 in trading yesterday after announcing plans to spend $7.8 billion to acquire Alteon WebSystems Inc. Nortel shares closed the week at $107.45, down nearly 14 per cent from a high trade Monday of $124.50.
Investors also cut their JDS Uniphase holdings, sending the stock down $17.40 to $172, a 16-per-cent fall from the week's high of $206.
In New York, the technology-heavy NASDAQ lost 4.66 per cent of its value, falling 179 points to 3,663. But traditional blue chips like Coca-Cola, Johnson & Johnson and Merck minimized losses of the Dow Jones Industrial Average.
Analysts were unanimous in attributing the bulk of yesterday's correction to the release of stunningly high U.S. Gross Domestic Product figures for the second quarter.
At 5.2 per cent, the searing GDP numbers kindled fears that the U.S. Federal Reserve will raise interest rates in an attempt to cool the searing U.S. economy and reduce the risk of inflation.
"We still believe there is a good chance for more downside to come, with the (NASDAQ) index having sold straight down in the last (nine) sessions," stated a Morgan Stanley Dean Witter report entitled The NASDAQ Carnage Continues. The report suggests the index could tumble another 110 points, to 3,558 before a rally is likely to begin. |
