Dow drops
Nasdaq falters -- 4th session of losses
Bonds turn higher
By Julie Rannazzisi, CBS MarketWatch
Last Update: 6:06 PM ET Apr 13, 2000 Market Pulse
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NEW YORK (CBS.MW) -- Late-day sellers emerged to take the Nasdaq lower Thursday, hurting large- and small-cap stocks alike. The index, off 9.6 percent on the year, has fallen for four straight sessions and is within a whisper of testing last week's lows.
Observers said nervous investors just aren't willing to hold on to positions for long. The Nasdaq has shed about 770 points this week, or a whopping 17.3 percent.
"It's disheartening to see a market unable to hold onto gains. I think we can test the lows from last week," remarked Louis Parks, senior managing director at Raymond James & Co.
"The market will look for solid quarterly reports and take apart those companies with less-than-stellar results," he added. But Thursday, even a string of positive results from a number of chip companies failed to keep the buyers in charge.
Inside the tech sector, all areas ended in the red with the exception of networking issues. The broader market saw gains in utility stocks while retail, oil service, paper and financial stocks sagged.
"There's no clear leadership in the broader market. We're going around in circles," said John Waterman, managing director of investments at Rittenhouse Financial.
The Dow Industrials fell 201.58 points, or 1.8 percent, to 10,923.55. Downside leaders were Home Depot, United Technologies, McDonald's, DuPont and J.P. Morgan.
The Nasdaq Composite fell 92.85 points, or 2.5 percent, to 3,676.78 after rising as much as 145 points in intra-day dealings.
"There are opportunities to buy good-quality companies at more affordable prices," noted Richard Babson, chairman and president of Babson-United.
Still, Babson believes that investors expecting large gains over the next months are overestimating the stamina of the market. "There will be individual star performers [but] we're heading up a hill of rising interest rates."
"Tech stocks clearly got ahead of themselves on a valuation basis but they've already done a lot of work on the downside. The earnings story is still pretty powerful for technology," Waterman added.
Tech rebounds will be slower and returns won't be as dramatic going forward, Waterman said. "We have to rein in our expectations."
"I see a return to a market with high single-digit returns on average. We're going to see a return to normalcy in the market," echoed Marvin Roffman, a partner at Roffman Miller Associates.
The Standard & Poor's 500 Index fell 1.8 percent while the Russell 2000 Index of small-capitalization stocks lost 0.9 percent.
Volume was heavy, coming in at 1.03 billion on the NYSE and at 1.95 billion on the Nasdaq Stock Market. Market breadth was negative, with losers beating winners by 17 to 12 on the Big Board and by 28 to 14 on the Nasdaq.
A whopping 196 new 52-week lows were set on the Nasdaq compared to a mere 11 new highs. On the NYSE, 28 new highs were set compared to 38 new lows.
Three Dow components unleashed earnings Thursday. General Electric (GE: news, msgs) checked in with a first-quarter profit of 78 cents a share, 1 cent ahead of the First Call estimate. The stock fell 6 3/4 to 150. See full story.
Honeywell (HON: news, msgs) registered a first-quarter profit of 63 cents per share, a penny ahead of the First Call estimate. Shares ended up 2 9/16 to 55 7/16. See Earnings Surprises.
And General Motors (GM: news, msgs) posted first-quarter earnings of $2.80 per share, handily beating the First Call estimate of $2.66 a share. Shares edged up 1/2 to 88. See full story.
A number of chip companies checked in with rosy earnings, but the Philadelphia Semiconductor Index (SOX) wasn't able to hold on to earlier gains and ended off 2.7 percent. (See 6-month chart of Philly chip index.)
Advanced Micro Devices shares rose 8 1/4 above Wednesday's NYSE close to 71 1/2. Late Wednesday (AMD: news, msgs) the company registered first-quarter earnings of $1.15, blasting past the First Call estimate of 58 cents a share. See full story. The company received upgrades from Prudential Securities and Deutsche Banc Alex. Brown.
See Rating Revisions.
KLA-Tencor (KLAC: news, msgs) lost 13 1/4 to 64 3/4. The company registered a third-quarter profit of 38 cents per share, well ahead of the First Call estimate of 33 cents a share.
Altera shares fell 2 5/16 to 79 11/16. Late Wednesday, the company (ALTR: news, msgs) reported first-quarter earnings of 36 cents per share, 2 cents ahead of the First Call estimate. In addition, S&P announced that Altera would replace Atlantic Richfield (ARC: news, msgs) in the S&P 500 index on a date to be announced.
Rambus shares fell 11 3/16 to 202 5/8 despite a better-than-expected earnings report. After the close Wednesday, in fact, the company (RMBS: news, msgs) posted a second-quarter profit from operations of 15 cents a share, beating the First Call estimate by a penny. Warburg Dillon Read raised its price target on the stock to $350 and reiterated its "strong buy" recommendation.
After rising earlier in the session, Merrill Lynch's B2B Holdrs (BHH: news, msgs), a basket of 20 business-to-business companies, fell into negative territory for the fourth straight session, losing 10.6 percent Thursday.
Ariba (ARBA: news, msgs), which had led the B2B sector higher for most of the session, lost its luster late in the session, losing 6 15/16 to 65 1/16. Late Wednesday, the company reported a loss of 6 cents a share in the second quarter compared to the First Call estimate projecting a loss of 8 cents a share. See full story.
Shares of Ameritrade (AMTD: news, msgs) lost 1 1/16 to 17 7/16. The brokerage posted a profit of 2 cents a share in the second quarter versus the 4-cent loss predicted by First Call. See story.
Meanwhile, blue-chip tech stocks -- including Oracle, Microsoft, Intel, IBM and Sun Microsystems -- continued to struggle.
Sun Microsystems (SUNW: news, msgs) checked in with third-quarter earnings of 26 cents per share after the close, beating the First Call estimate of 23 cents per share. The stock ended off 2 1/4 to 77 3/4 ahead of the news.
Gateway (GTW: news, msgs) posted first-quarter earnings of 41 cents a share, matching the First Call estimate. The stock ended off 3 7/8 to 51 3/8 ahead of the news.
See After Hours for post-market trading activity.
In the Treasury arena, prices turned positive as losses in the broader equity market extended. Stronger-than-expected economic data had kept bond investors on the defensive for most of the trading session.
The March producer price index rose a hefty 1.0 percent overall but only 0.1 percent at the core, which excludes the volatile food and energy components. The PPI was expected to have risen by 0.5 percent overall and 0.2 percent at the core. See full story.
"Rocketing gasoline prices -- as well as much more modest increases in electricity and natural gas prices -- explain the huge rise in the headline index. It will begin to reverse next month, reflecting the recent sharp falls in wholesales gasoline prices," said Ian Shepherdson. chief U.S. economist at High Frequency Economics.
"The Fed has dodged another bullet. Nothing in [the PPI] demands that the FOMC raise rates more than the expected 25 basis points on May 16th. Petroleum-related wholesale costs are under pressure, but we have yet to see any major indications that those problems are being passed through into finished goods prices," said Joel Naroff, chief economist at Naroff Economic Advisors.
In addition, March retail sales climbed 0.4 percent overall and 1.4 percent when excluding autos. It was expected to have risen 0.3 percent overall and 0.6 percent at the core. In other news, weekly initial claims rose 3,000 to 264,000.
Friday will see the release of the March consumer price index, which is expected to rise by 0.5 percent overall and 0.2 percent at the core, according to a survey conducted by CBS MarketWatch.com. View economic calendar and forecasts and historical economic data.
The 10-year Treasury note edged up 3/32 to yield 5.96 percent while the 30-year bond added 6/32 to yield 5.82 percent.
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Separately, Fed Chair Alan Greenspan spoke before the Senate Banking Committee on the future of securities markets Thursday morning. However, he made no mention on monetary policy. See related story.
In the currency market, dollar/yen was recently trading at 105.83, up 0.1 percent from the previous close, while euro/dollar fell 0.5 percent to 0.9536.
In the commodity arena, May crude lost 3 cents to $25.38 while the Bridge CRB index rose 1.32 to 212.07. View latest commodity prices.
Julie Rannazzisi is markets editor for CBS MarketWatch. |
