Market Snapshot:
Nasdaq off 9.7%; Dow off 5.6%
Stocks suffer mass losses
By Julie Rannazzisi, CBS MarketWatch
Last Update: 9:03 PM ET Apr 14, 2000 Market Pulse
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NEW YORK (CBS.MW) -- The Nasdaq and the Dow both suffered record one-day point losses Friday as inflation fears stoked a historic plunge that lopped off the U.S. stock market's value by some $2 trillion.
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The Dow, at one point losing as much as 730 points, plunged 615.30, or 5.6 percent, to finish the bruising session at 10,308.25. All components of the blue-chip average closed lower, with Procter & Gamble (PG: news, msgs) down 9.4 percent, SBC Communications (SBC: news, msgs) off 9.3 percent and Intel (INTC: news, msgs) falling 8.8 percent.
For its part, the Nasdaq Composite tumbled 355.07 points, or 9.7 percent, to 3,321.71.
Heavy volume
Trading volume was extremely heavy. The Nasdaq saw 2.51 billion shares change hands, while the New York Stock Exchange recorded volume of 1.26 billion shares.
Advancers on the Nasdaq and New York Stock Exchange were overshadowed by decliners. Advancers numbered 551. Decliners numbered 3,948.
Investor sentiment shifted sharply after an economic report Friday morning showed that consumer prices rose in March, spurring inflation fears and concerns that the Fed may need to raise interest rates more aggressively.
"Fear is definitely prevalent. The question is, How do you rebuild?" said Bryan Piskorowski, market analyst at Prudential Securities.
The Standard & Poor's 500 Index fell 5.8 percent while the Russell 2000 Index of small-capitalization stocks lost 7.3 percent. Just ahead of the close of the trading day, S&P futures (SP=M0: news, msgs) were halted because they had fallen by their maximum allowable daily limit, ending down 5.9 percent.
'Technically oversold'
"The Nasdaq is now technically oversold, but the latest leg down has taken its toll," Piskorowski said, referring to margin calls that have hit the market and exacerbated the selling.
Among the big names hitting new 52-week lows were Microsoft (MSFT: news, msgs), Amazon (AMZN: news, msgs) and MCI WorldCom (WCOM: news, msgs).
Financial stocks took a beating and remained the Dow's downside leaders. Retail and consumer stocks were also sharply lower, as were paper and biotech shares. Safe-haven gold stocks rose, as did oil service shares -- the only two sectors in the black Friday. In the tech arena, all sectors were in the red, with computer software, chip and Internet issues seeing the largest setbacks.
"They're throwing away the baby with the bath water," remarked Joe Liro, equity strategist at Stone & McCarthy Research Associates. The buy-the-dip mentality, which has halted numerous market dives in recent years, is currently nonexistent, he added.
And the huge down volume compared with up volume suggests panic selling is taking place, Liro said.
'Excess liquidity'
"The current decline," said Jeff Cooper, co-founder of TradingMarkets.com, "shows that when excess liquidity is evaporating from the markets -- as it is currently -- all the fundamentals, all the upgrades in the world, all the king's horses and all the king's men can't put Humpty Dumpty back together again.
"That is, until the excesses are completely eliminated. Great earnings won't help stocks if expectations have been running high. And they have been running very high.
"The inability of the market to maintain numerous rally attempts Thursday shows that some funds may be in trouble or (that) margin calls may be proving too much to handle," Cooper said.
Robert Dickey, chief technical analyst at Dain Rauscher Wessels, said that at a time when the market is falling sharply, a wise strategy may be to avoid buying for several days because momentum of this sort often builds into a trend.
"Until there is more evidence of a bottom, rallies are not to be trusted, especially when they occur on the open," he said. "A real bottom will likely open weak and close better. After that, another period of testing is likely -- which could last a month or two."
Data watch
The March consumer price index rose 0.7 percent overall and 0.4 percent at the core, which excludes the food and energy components. A survey conducted by CBS.MarketWatch.com had expected the CPI to rise by 0.5 percent overall and 0.2 percent at the core.
Most major spending categories contributed to March's increase, which was the highest since last April. See full story.
"(While) one bad report does not make a trend, the indications that pricing pressures are building have been there for a while now. The incredibly robust economy has given firms a measure of pricing power that they have not had for quite some time, and they are beginning to use it," said Joel Naroff, chief economist at Naroff Economic Advisors.
Though the Fed has demonstrated its willingness to move rates only in 25-basis-point increments, Friday's CPI data "clearly puts a 50-basis-point rise back in play," Naroff added.
The belief that the Fed may abandon its gradualist approach sent stocks into a free fall.
Separately, Goldman Sachs' chief strategist, Abby Joseph Cohen, told clients early Friday that she continues to see good fundamentals and good prospects for good corporate profits.
In specific issues, Sun Microsystems dropped 1 1/4 to close at 76 1/2. The company (SUNW: news, msgs) checked in with third-quarter earnings of 26 cents per share after the close Thursday, beating the First Call estimate of 23 cents per share. See full story.
Shares of Gateway fell 1/2 to 51 1/2. Late Thursday, the company (GTW: news, msgs) posted first-quarter earnings of 41 cents a share, matching the First Call estimate. See full story.
PMC-Sierra (PMCS: news, msgs) lost 7 1/8 to 118 7/16. After the close Thursday, the chipmaker registered first-quarter earnings of 17 cents per share, a penny ahead of the First Call estimate.
In other news, Ford (F: news, msgs) lost 2 3/16 to 52 1/4. The auto giant revealed plans to spin off auto supply unit Visteon. Visteon, with 1999 sales of $19.4 billion, will rank among the top 100 companies on the Fortune 500 once it becomes an independent company, Ford said. See full story.
Juniper Networks lost 16 15/16 to 158 1/16. Late Thursday, the company (JNPR: news, msgs) posted a fourth-quarter profit from operations of 6 cents a share vs. the First Call estimate of 3 cents a share. The firm also declared a 2-for-1 stock split, effective June 16.
In the bond market, prices lost ground on the CPI news. The 10-year Treasury note shed 3/32 to yield 5.93 percent, while the 30-year bond lost 1/8 to yield 5.79 percent. See Bond Report.
In other economic news, February business inventories rose 0.5 percent, compared with the expected rise of 0.6 percent. In addition, March industrial production rose by an as-expected 0.3 percent, while capacity utilization came in at 81.4 percent compared to the expected 81.7 percent. View economic calendar and forecasts and historical economic data.
In the currency arena, dollar/yen was recently trading at 104.70, off 1.1 percent from the previous close, while euro/dollar added 0.8 percent to 0.9599.
In the commodity arena, May crude rose 2 cents to $25.40, while the Bridge CRB index fell 1.20 to 211.12. View latest commodity prices.
Julie Rannazzisi is markets editor for CBS MarketWatch.
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