The Market looks for more to worry about -- and it finds it...
Stocks Down on Profit Worries, Jobs Data
Friday April 6, 10:45 am Eastern Time
By Haitham Haddadin
<<NEW YORK (Reuters) - Stocks added to losses on Friday as downbeat corporate news and weaker-than-expected U.S. jobs data reignited worries the world's biggest economy may be headed for recession.
The stream of corporate profit warnings and other bleak news resumed after Thursday's session ended with a strong rally, and came from the likes of Tellabs Inc. (NasdaqNM:TLAB - news), the communications equipment maker, and Internet gear makers Sycamore Networks Inc. (NasdaqNM:SCMR - news) and Extreme Networks (NasdaqNM:EXTR - news).
The technology-laced Nasdaq Composite Index (.IXIC) slumped 64.73 points, or 3.63 percent, to 1,720.27. This after posting its biggest rally in three months on Thursday, when it bolted up 146.20 points, or 8.92 percent, snapping a three-day losing streak.
The blue-chip Dow Jones industrial average (.DJI) fell 173.87 points, or 1.75 percent, to 9,744.18, with most of its 30 component stocks down. The broader Standard & Poor's 500 Index (.SPX) was down 23.31 points, or 2.02 percent, at 1,128.13. On Thursday, the Dow had surged more than 402 points, or 4.23 percent -- its second-biggest point gain ever -- and the S&P added 48 points, or 4.37 percent.
The Labor Department's March jobs report showed a decline of 86,000 in non-farm payrolls, vs. an expected creation of 58,000 non-farm jobs in March following a 135,000 rise in February. The unemployment rate matched the 4.3 percent expectations, but was the highest since mid-1999.
``This is telling us that the tight labor market no longer exists and it is perhaps another sign that recession is looming,'' said Peter Cardillo, director of research at Westfalia Investments in New York.
Like other market-watchers, Cardillo said the decrease in non-farm payrolls of 86,000 is somewhat of a surprise, and may raise the eyebrows of the Federal Reserve and hopes for an inter-meeting interest rate cut. The only question is, will the Fed do that, Cardillo added.
Dallas Federal Reserve President Robert McTeer said on Friday that growth in the U.S. economy was currently running above zero. In remarks to a conference on manufacturing, he added that gross domestic product for the first quarter ended March 31 may be a little above or a little below zero.
Thursday's rally, which gave Nasdaq its third-largest percentage gain ever, came after computer maker Dell Computer Corp. (NasdaqNM:DELL - news) stood by its first-quarter targets and breathed life into a market smothered by corporate profit warnings. But to some it looked like a one-day wonder, and more bad news was just around the corner.
Tellabs early on Friday cut its first-quarter guidance for the second time and said lower and deferred spending by communications carriers late in the quarter prompted the latest downward revision.
Sycamore Networks warned after the close on Thursday that it would report a third-quarter loss because of weak customer orders, and that it would lay off 13 percent of its work force and take a restructuring charge of up to $150 million.
Nasdaq's decline on Friday was led by Web infrastructure giant Cisco Systems Inc. (NasdaqNM:CSCO - news), down 5/8 at $14-5/16, and other tech heavyweights like Intel Corp. (NasdaqNM:INTC - news) and Microsoft Corp. (NasdaqNM:MSFT - news). Tellabs fell more than 15 percent, down $6-1/4 at $34-1/2, and Sycamore lost nearly 25 percent of its value, off $2-5/16 at $6-13/16.
No. 1 semiconductor maker Intel Corp. fell $1-1/8 to $24-1/2 and software titan Microsoft Corp. shed $1 to $55-3/4. Both Nasdaq-traded issues are components of the Dow and weighed on the blue-chip index.
Extreme Networks warned third-quarter earnings and revenues would fail to meet expectations due to lower-than-expected customer orders. It said it plans to slash an unspecified number of workers, cut its cost structure by 10 percent and take total charges of $47 million. Extreme Networks' shares
fell 10.3 percent, or $1.65 to $14.36.
Network testing equipment maker Agilent Technologies Inc. (NYSE:A - news) lost $5.01 at $25.61, for a decline of more than 16 percent, after it announced a 10 percent temporary pay cut late on Thursday, saying business was worse than expected and sales were faltering to customers like big communications firms.
Agilent, which lowered its revenue forecast for the fiscal year in February, said orders from major customers had dropped dramatically in the last four to six weeks and it could no longer make a meaningful estimate for the year. Agilent shares trade on the New York Stock Exchange.>> |
