<FONT COLOR=BLUE>MARKET SNAPSHOT--Dow's losses mount; Nadaq lower
Oil surges on Mideast crisis, Home Depot warns
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 12:17 PM ET Oct 12, 2000 NewsWatch
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NEW YORK (CBS.MW) - The Dow Industrials took a nosedive Thursday, tacking on bruising losses of over 300 points, amid a profit warning from Home Depot and a surge in oil prices due to mounting tension in the Middle East.
"The panic selling [on the Middle East crisis] enveloped all sectors of the market. It's a short-term extreme move until the news get built in," said Chris Wolfe, equity strategist at J.P. Morgan.
Meanwhile, Wolfe said, the market continues to downwardly adjust its growth expectations, referring to Home Depot's woes and its significant weight on the Dow's performance.
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Updated:
10/12/2000 11:54:22 AM ET
November crude zoomed $2.12 to $35.37 after peaking at $37.00 -- levels not seen in about three weeks -- as a U.S. Navy ship was struck Thursday in Yemen and news that Israel launched helicopter attacks on Palestinian leader Yasser Arafat's headquarters. See related story.
Safe haven flows poured into December gold, meanwhile, which climbed $3.00 to $276.00. Treasurys were also the beneficiaries of flight-to-quality flows, led by short-dated issues.
The dumping of blue chips quickly spilled over into the Nasdaq, which unsuccessfully attempted a rebound as chip stocks saw some nibbling early in the session. Sellers were quick to emerge, however, and the tech-packed index fumbled for a sixth straight session.
Inside the market, oil and oil service shares climbed heartily as crude prices flew. Gold stocks also rallied following the surge in gold futures. Utilities were the only other stocks in the broad market trading in the black.
The Dow Jones Industrials Average ($DJ: news, msgs) tumbled 309 points, or 2.3 percent, to 10,178.
"The market is in a panic phase right now. It's a combination of the [oil spike] and earnings jitters," remarked Peter Boockvar, equity strategist at Miller Tabak & Co.
When the market is in the shaky state it's been over the past weeks, it becomes less tolerant to news like the kind emerging from the Middle East, Boockvar said. "We're seeing more fear."
Home Depot shares plunged 28 percent, or $13.56 to $35.38. The retailer expects to report earnings-per-share of 28 cents in the third quarter versus First Call estimates of 31 cents a share. Home Depot pinned the shortfall on deflation in lumber ad building materials pricing and added that many of the factors affecting third quarter sales will adversely impact sales in the fourth quarter. The company now estimates 2000 earnings-per-share to be in the range of $1.16 to $1.17 versus the First Call estimate of $1.25.
General Motors shaved 50 cents to $58.13. The company (GM: news, msgs) reported a third-quarter profit of $1.55 a share versus $1.54 in the year-ago period.
The Nasdaq Composite ($COMPQ: news, msgs) erased 40 points, or 1.3 percent, to 3,128 while the Nasdaq 100 Index ($NDX: news, msgs) declined 29 points, or 1.0 percent, to 3,070.
The Standard & Poor's 500 Index ($SPX: news, msgs) lost 1.7 percent while the Russell 2000 Index ($RUT: news, msgs) of small-capitalization stocks erased 1.3 percent.
Volume was very heavy at 667 million on the NYSE and at 1.00 billion on the Nasdaq Stock Market. Market breadth was indeed shabby, with decliners outpacing advancers by 19 to 8 on the NYSE and by 25 to 12 on the Nasdaq.
Sector movers
Retail stocks took a drubbing in the wake of the Home Depot warning as the S&P Retail Index ($RLX: news, msgs) tumbled a whopping 8.2 percent. The index has fallen about 31 percent this year. Dow-component Wal-Mart (WMT: news, msgs) saw its shares fall 5.1 percent to $43 and Nordstrom (JWN: news, msgs), which alerted investors of a shortfall on Wednesday, gave up 19 cents to $14.44.
The semis initially benefited from a respectable performance in chip equipment stocks on the heels of better-than-expected results from KLA-Tencor. But the Philly Semiconductor Index ($SOX: news, msgs), was quick to relinquish gains and fell 1.1 percent, mirroring the dismal price action in the rest of the market. The index fell for the sixth straight session.
KLA-Tencor (KLAC: news, msgs) said first-quarter earnings came in at 54 cents a share, three cents ahead of the First Call estimate. The company said that geographically, the strongest performance came from Japan and Singapore. The stock fell 9.8 percent, or $3.50 to $32.18. Among the other equipment makers, Applied Materials (AMAT: news, msgs) lost $1 to $50.56 and Teradyne (TER: news, msgs) erased 44 cents to $32.25.
Meanwhile, Advanced Micro Devices registered earnings-per-share of 64 in the third quarter, beating the First Call estimate by two pennies. Sales came in at $1.21 billion, which met analysts' expectations. The company also said that their European business - which had been cited by Intel and Dell Computer as reason for their shortfalls - "looked just fine." Read the full story. Shares (AMD: news, msgs) declined 38 cents to $23.13, erasing earlier gains. But bellwether Intel (INTC: news, msgs) added $1 to $36.38.
Bond action
Government prices flexed their muscles as safe haven flows poured on. The 10-year Treasury note climbed 12/32 to yield ($TNX: news, msgs) 5.73 percent while the 30-year bond rose 9/32 to yield ($TYX: news, msgs) 5.81 percent. See Bond Report.
Thursday's economic agenda included the release of weekly initial claims, which added 5,000 to 306,000.
In other news, import prices rose 1.5 percent in September while non-fuel prices declined by 0.3 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
"Import prices surged in September, but the headline number really does not mean much. The gain was entirely due to a huge 14.1 percent jump in petroleum costs," said Joel Naroff, chief economist at Naroff Economic Advisors.
"Excluding oil, the costs of foreign products actually declined. This was only the second time since July 1999 that we saw imported goods costs fall," Naroff continued.
In the currency market, dollar/yen eased 0.3 percent to 107.42 while euro/dollar lost 0.1 percent to 0.8638. |
