>Jim you think it's in the tech sector think Again?
Mark, I don't think its just in the tech sector either.
Wall Street got rattled last week...what does that tell you?
Btw
Anyone cocky enough to talk about reality on the winners thread?
>New York, Oct. 6 (Bloomberg) -- Morgan Stanley Dean Witter & Co., Merrill Lynch & Co. and Bear Stearns Cos. led the biggest drop in securities firm shares in six months. A five-week slide in telecommunications shares, capped by a plunge today, could dent investment banking and trading profits on Wall Street.
``People are skittish over the broader market's technology declines,'' said Joan Solotar, an analyst at Donaldson, Lufkin & Jenrette. ``They're worried that hits are being taken in merchant banking and high-yield, specifically for telecom and tech.''
The American Stock Exchange's Broker-Dealer Index fell 5.3 percent, its biggest one-day decline since April 14, when the Nasdaq Composite Index closed its worst week in 30 years. Morgan Stanley dropped 8.4 percent to $84.25, Merrill fell 7.73 percent to $61.1875 and Bear Stearns 8 percent to $58.375.
Stoking the declines was speculation, reported by CNBC, that Morgan Stanley, which last month reported less-than-expected earnings, was unloading money-losing positions in high-yield telecom bonds.
The firm has posted losses by marking down its holdings of ICG Communications Inc. and Viatel Inc. -- bonds it underwrote -- said a managing director with knowledge of the firm's high-yield corporate bond trading business. The executive said, though, Morgan Stanley's corporate high-yield bond trading is still profitable for the year and the quarter.
Asia Global Crossing
Today's initial public offering by Asia Global Crossing Ltd. underscored the impact waning demand for telecommunications companies could have on brokerages.
Asia Global, which is building a trans-Pacific and pan-Asian network, raised $476 million, half the initial target. Since underwriters earn fees from the proceeds, that cut their commission. What's more, two firms hired to sell the stock, Goldman Sachs Group Inc. and Salomon Smith Barney Inc., agreed to buy almost one-quarter of the offering for their own accounts.
Because many firms posted record earnings a year ago, a slowdown in underwriting revenue could drive their shares lower.
``You're entering a period where you're coming upon difficult comparisons,'' said Andy Absler, an analyst at Scudder Kemper. ``There's a lot going on that can make people nervous.''
Also weighing on brokerage stocks are concerns about margin calls after sharp drops in companies such as Apple Computer Inc. and Priceline.com Inc.
Even Bernard Ebbers, the chief executive of WorldCom Inc., was victimized in margin call. He filed this week to sell more than 15 percent of the shares he held in the communications company to repay loans from his broker.
Such forced sales drive companies' shares lower.
``We're seeing a lot of margin calls -- retail's starting to have to kick some of this out, and that's a bad sign,'' said Chris Holter, co-head of equity trading at First Union in Baltimore. ``Prices are continuing to deteriorate in a lot of these'' brokerage stocks.
Oct/06/2000 16:55 ET |
