Nasdaq Ends Down 120; Dow Falls 39
Technology Stocks Lead Market to Lower Close; Nasdaq Falls 120 to 3,978 While Dow Jones Industrials End Down 39 at 11,221
NEW YORK (AP) -- Technology stocks plummeted Friday, carrying the rest of the stock market lower, as investors reacting to a series of earnings warnings decided to take profits from the market's recent rally.
The Nasdaq composite index closed down 119.90 at 3,978.45, according to preliminary calcuations.
The Dow Jones industrial average was down 39.22 at 11,220.65 and the Standard & Poor's 500 index fell 8.01 to 1,494.50.
The declines more than erased the gains made during a tumultous week on Wall Street, where investors first abandoned tech stocks for blue chips and then completely changed their strategies. ``What we're doing now is pricing in some measure of an economic slowdown. We're looking at a fair number of warnings about slowdowns in the third quarter,'' said Chris Dickerson, an analyst with Global Market Strategists in Gainesville, Ga.
Before the market opened, a handful of companies warned that their earnings would not meet expectations.
National Discount Brokers warned that the company would post a 6-9 cent loss because of difficult market conditions, instead of the 9-cent profit analysts expected. The stock plunged 8 to 27 13/16. E+Trade slipped 15/16 to 18 1/8, and Ameritrade lost 1 1/4 to 19 9/16.
Yahoo continued to fall on Internet advertising concerns, off 2 1/16 to 104 7/8. But the stock found support at 99 3/4, just above its July low of 99 1/2. DoubleClick fell 2 3/4 to 33 1/2, and Engage lost 1 1/2 to 10. CS First Boston reiterated Strong Buy on DoubleClick ahead the company's Sept. 11 meeting with analysts.
CMGI continued to get a lukewarm reception to its reorganization plan, losing another 3 7/8 to 39 5/16.
But the beleaguered Internet consultant sector found some takers on a William Blair & Co. upgrade of Scient, which soared 6 1/2 to 27 1/4. The firm said it expects Scient to make its numbers this quarter. Proxicom added 2 1/32 to 22 1/32, Sapient rose 3/4 to 48 5/8, but down from a high of 53, and Viant slipped 1/4 to 7 5/8 on a Robertson Stephens downgrade.
Telecom equipment stocks were lower on a Wall Street Journal article that said the declining revenues faced by traditional telecom stocks could lead to a slowdown in equipment spending. Cisco fell 2 3/8 to 63 7/8, Juniper Networks was down 18 21/32 to 196 7/32, and Northern Telecom fell 4 13/16 to 72 3/16.
Aether Systems slipped 2 13/16 to 141 3/16 after trading as high as 151 on a Lehman Brothers Buy rating and $210 price target.
BroadVision gave back 2 7/16 to 35 1/2 after confirming rumors of an alliance with IBM. The stock had run up on the rumors Thursday. NaviSite gained 7/32 to 45 5/32 after announcing an alliance with Compaq and EMC.
OTG Software rose 3/4 to 34 on a second day of positive analyst comments, this time from CS First Boston.
Commerce One gained 11/16 to 71 3/16 a day after closing above the important 70 level. The company is expected to announce additional contract wins in the near future. But Ariba lost 7 3/8 to 154 1/2, and i2 fell 9 5/16 to 160 1/2.
Tvia soared 3 1/2 to 15 3/4 on news of an alliance with Wind River Systems.
Some technical comments on the market: The Dow broke its rising wedge to the downside Friday morning, so now all the major indexes have broken their uptrends that began a month ago. They all have downside potential to last month's lows, but there are a number of important support points that could bring a halt to the selling before then.
The Dow has so far held 11,200 support; 11,100 is next, then 11,000, and then the important support of 10,900, the upper boundary of the Dow's bearish diamond pattern, which the index broke out of last month. 11,200 may be the neckline of a head-and-shoulders top on the Dow; given that the Dow's rally began in late July with an inverse head-and-shoulders bottom, the 11,200 level carries some significance.
The Nasdaq, S&P 500 and the ISDEX have already broken rising wedges to the downside, not a good sign in September, historically the weakest month of the year. However, it is encouraging that Friday's selling is so far not occurring on rising volume. That, of course, can also be a negative, since it's tough to get capitulation on the part of sellers without high volume.
The Nasdaq closed below 4000 and its 200-day moving average at 4008, but finished above its 50-day moving average at 3,971. Thursday's recovery came on lower volume, so Friday's selling did not come as a surprise. The Nasdaq struggled at 4100 resistance Thursday. We are hopeful that the sell-off on the Nasdaq and Nasdaq 100 can end at their downtrend lines broken two weeks ago.
Those downtrend lines are now at about 3900 on the Nasdaq and 3750 on the Nasdaq 100; not too far from here. A high-volume decline and then a bounce off those levels would be a positive sign. A break below those levels would likely lead to a wider sell-off. First support on the ISDEX is 790-800, where the index finished Friday, but critical support is just above 700, which is now the intersection of the index's March downtrend and May uptrend lines.
To the upside, the ISDEX's recent rally was capped by the 50% retracement level of 850. The S&P 500 is back below the important 1500 level. Next support is in the 1480-1490 range; so far, the S&P has held at 1490. The index has met with strong resistance around its all-time closing high of 1527. Have a good weekend.
A warning from Gadzoox Networks pushed its shares down $1.94 -- or more than 18 percent -- to $8.38 on the Nasdaq.
Automotive parts maker TRW's stock fell nearly 10 percent early in the day on its warning of disappointing results, but, by afternoon, its shares had inched back up to $43.81, only $1.44, or 3.2 percent, off its closing price Thursday.
Shares of First Data dropped $2.69 to $41, a more than 6 percent change after a Morgan Stanley Dean Witter Corp. analyst downgraded the credit-card transaction processor's stock to ``outperform'' from ``strong buy.''
High-tech communications firm MPower Communications fell $3.44 to $8.88, a decline of more than 27 percent after a Merrill Lynch analyst cuts its rating to ``accumulate'' from ``buy.'' The downgrade came a day after MPower revised its third- and fourth-quarter outlook downward, saying its haste to get to the market proved more costly than it expected.
At the same time, shares of retailer Burlington Coat Factory surged $2.13 to $15 -- a 16 percent jump -- after it reported an increase in its sales at stores open at least a year.
Dickerson, the Global Market Strategists analyst, said the market's focus on tech stocks one day, then blue chips another reflected its lack of direction.
Early in the week, investors had bid blue chips higher. But they shifted their attention to the Nasdaq on Thursday, sending it up 85.01, while the Dow fell 50.77 after chemical company DuPont warned that its earnings would be down because of soft demand and increased costs.
``Anytime anything looks to be moving, money mangers jump into that sector because they have to squeeze out what percentage of profit they can. They'll jump in for a couple of days and then jump out,'' Dickerson said. ``There's a rush almost to avoid not losing out.''
The Russell 2000 index was down 5.29 at 537.53.
Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where volume came to 958.62 million shares, compared to 973.54 million the previous session.
Overseas, Japan's Nikkei stock average rose 1.23 percent. Germany's DAX index was down 1.43 percent, Britain's FT-SE 100 was down 1.32 percent, and France's CAC-40 was down 1.92 percent. |
