Summary of analysts' comments:
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April 10, 2000
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Nervousness Sends Nasdaq
Down More Than 250 Points
An INTERACTIVE JOURNAL News Roundup
NEW YORK -- Technology stocks were pounded Monday, amid nervousness about the current earnings season and warnings from analysts that new cash won't flow into tech stocks the same way they did in the past.
The Nasdaq composite fell 258.25, or 5.8%, to close at 4188.20, erasing all of Friday's 178.79-point gain, its biggest one-day point gain ever. Morgan Stanley's high-tech 35 index fell 54.94 to 1022.46.
Steven Kroll, managing director at Monness, Crespi & Hardt, said nervousness about whether technology stocks will meet high earnings expectations contributed to the Nasdaq composite's decline.
Also hurting the Nasdaq were predictions from strategists at three large investment firms of a tough time ahead for technology shares.
Among sector leaders, Microsoft fell 3 to 86 1/16 and Cisco Systems dropped 2 3/8 to 72 9/16, both on the Nasdaq Stock Market. Motorola fell 2 7/8 to 149 at 4 p.m. on the New York Stock Exchange ahead of its quarterly earnings release.
In separate market reports, strategists at Credit Suisse First Boston, Merrill Lynch and Warburg Dillon Read said that the sector wouldn't see new money coming in, as it has in recent months, and that existing money would head elsewhere.
"The rotation of investment funds into nontechnology areas of the S&P 500 represents the onset of a medium- or longer-term portfolio," wrote Christine Callies, chief U.S. market strategist for Credit Suisse First Boston.
Gail Dudack, equity investment strategist at Warburg Dillon Read, said the index could still fall further.
"Volatility within a range of 4450 to 3650 is what we expect for the next four to eight weeks," she wrote.
Richard McCabe, chief market analyst at Merrill Lynch, said last week's sell-off by the Nasdaq wasn't "a brief, random event, but the beginning of a longer lasting change."
Last week saw a 349-point plunge by the Nasdaq on Monday. That was followed by Tuesday's broad upheaval, as large- and small-cap markets staged one of their biggest declines and one of their biggest one-day recoveries -- all within the span of a few hours.
"The storms that have swept through the stock market in recent days have driven home this point," wrote Mr. McCabe. "The technology sector has begun an important corrective trend."
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I'd really like to see the full reports from Merrill Lynch, Credit Suisse, and Warburg Dillon Read. If anyone has them, could you post? Now, based on the following article, dated today, it seems clear CNBC could have taken a positive slant just as easily as negative. Note how many firms have upped their tech allocations as of last week.
Leading Wall St. Firms' Asset Allocation Recommendations
04/10/2000
Dow Jones News Service
Firm Strategist Stocks Bonds Cash
A.G. Edwards & Sons Mark Keller 55% 35% 10%
Bear Stearns & Co. a. Liz Mackay 60% 35% 5%
C.S. First Boston Christine Callies 55% 30% 15%
DLJ Securities Corp. Tom Galvin 80% 15% 5%
First Union Securities Rao Chalasani 65% 30% 5%
Goldman Sachs & Co. b. Abby Joseph Cohen 65% 27% 5%
J.P. Morgan Securities Douglas Cliggott 50% 25% 25%
Legg Mason Wood Walker Richard Cripps 65% 30% 5%
Lehman Brothers Inc. Jeffrey Applegate 80% 0% 20%
Merrill Lynch & Co. c. David Bowers 50% 30% 15%
Morgan Stanley Peter Canelo 75% 15% 10%
PaineWebber Inc. d. Edward Kerschner 53% 27% 20%
Prudential Securities e. Greg Smith 75% 5% 15%
Salomon Smith Barney f. John Manley 60% 35% 5%
Warburg Dillon Read Gail Dudack 45% 30% 25%
a. Bear Stearns previously recommended investing 55% in stocks, 35% in bonds and 10% in cash. Its new allocation took effect April 5.
b. Goldman Sachs recommends investing the remaining 3% in commodities.
c. Merrill Lynch recommends investing the remaining 5% in commodities.
d. PaineWebber previously recommended investing 52% in stocks, 29% inbonds and 19% in cash. Its new allocation took effect April 6.
e. Prudential recommends investing the remaining 5% in real estate.
f. Salomon Smith Barney previously recommended investing 55% in stocks, 35% in bonds and 10% in cash. Its new allocation took effect April 4.
10:20 AM
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the same list as of April 3, 2000:
Leading Wall St. Firms' Asset Allocation Recommendations
04/03/2000
Dow Jones News Service
Firm Strategist Stocks Bonds Cash
A.G. Edwards & Sons Mark Keller 55% 35% 10%
Bear Stearns & Co. Liz Mackay 55% 35% 10%
C.S. First Boston Christine Callies 55% 30% 15%
DLJ Securities Corp. Tom Galvin 80% 15% 5%
First Union Securities Rao Chalasani 65% 30% 5%
Goldman Sachs & Co. a. Abby Joseph Cohen 65% 27% 5%
J.P. Morgan Securities Douglas Cliggott 50% 25% 25%
Legg Mason Wood Walker Richard Cripps 65% 30% 5%
Lehman Brothers Inc. b. Jeffrey Applegate 80% 20% 0%
Merrill Lynch & Co. c. David Bowers 50% 30% 15%
Morgan Stanley Peter Canelo 75% 15% 10%
PaineWebber Inc. Edward Kerschner 52% 29% 19%
Prudential Securities d. Greg Smith 75% 5% 15%
Salomon Smith Barney Marshall Acuff 55% 35% 10%
Warburg Dillon Read Gail Dudack 45% 30% 25%
a. Goldman Sachs recommends investing the remaining 3% in commodities. Goldman previously recommended investing 70% in stocks, 27% in bonds and 0% in cash. Its new allocation took effect March 28.
b. Lehman previously recommended investing 80% in stocks, 10% in bonds and 10% in cash. Its new allocation took effect April 3.
c. Merrill Lynch recommends investing the remaining 5% in commodities.
d. Prudential recommends investing the remaining 5% in real estate.
11:44 AM
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Note in the following that Gail Dudack is dubbed a bear:
interactive.wsj.com
And while Cohen doesn't set policy, it could be argued that her influence on the stock market has been even greater and more lasting than Greenspan's. After all, though the Fed chairman has been warning one way or another for more than three years about the dangers to the equity market of "irrational exuberance," Cohen has been conservatively bullish throughout the bull market to the point she stands alone as Wall Street's unchallenged diva. So it won't be over for many on the Street until the Sachs lady sings.
By contrast, Gail Dudack , like most of the other strategists at Wall Street firms, has been relegated to the chorus. Dudack, who plies her trade for Warburg Dillon Read LLC, is well respected and appears regularly on TV's Wall Street Week with Louis Rukeyser.
Now she finds herself once again in the role of bear to Cohen's cautious bull, with a call of 1300 for the S&P 500 and an equities weighting of only 45%.
The index at 1300 would mean a drop of roughly 15%.
Cohen demonstrated her influence again yesterday morning, handing the stock market a mild setback after advising Goldman clients to lower the weighting in stocks to 65% from 70%. But she left her year-end target for the Standard & Poor's 500-stock index unchanged at 1575, from 1507 now, and said the index could reach 1625 a year from now.
Dudack enhanced her considerable reputation in February, 1995, when, amid considerable bearish muttering, she called for the market to take off. And take off it did, beginning the greatest bull market upleg in history. But she turned bearish a year later and has been intermittently bearish ever since.
As t2 said, it's better to have bears staying bearish.
Pat
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