MARKET SNAPSHOT
Heavy declines for tech stocks
Nasdaq breaches key support
By Julie Rannazzisi, CBS MarketWatch
Last Update: 12:56 PM ET May 22, 2000 Market Pulse
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NEW YORK (CBS.MW) -- A breakdown in big-name technology stocks pushed the Nasdaq deep in the red Monday and also weighed on the Dow Industrials.
The Nasdaq breached its low of the year of 3,227 reached on April 17, plunging to 3,172 in intra-day dealings.
"If the April 17 low is violated, the next significant area of support for the Nasdaq can be found at 2,900," said Todd Gold, technical strategist at Gruntal & Co.
Weakness in the tech sector was again widespread, enveloping small- and big-cap issues alike. Computer software and Internet issues lost the most ground while the broader market saw the largest losses in the biotech and brokerage sectors. The gold and utility stocks were again bid up amid the turmoil in the overall market.
"The path of least resistance remains on the downside in the near to intermediate-term," Gold said.
The Dow Industrials tumbled 199 points, or 1.9 percent, to 10,426 at 12:53 p.m. (See 6-month chart of Dow and Nasdaq.)
Shares of General Motors, General Electric, Intel and Hewlett-Packard paced the market's decline. Exxon Mobil, Caterpillar and McDonald's led on the upside.
The Nasdaq Composite declined for the fourth straight session, plummeting 167 points, or 4.9 percent, to 3,222 while the Nasdaq 100 index shed 153 points, or 4.7 percent, to 3,106.
"People have had a rude awakening to valuations," said Art Hogan, chief market strategist at Jefferies & Co.
Tech behemoths Cisco Systems, Sun Microsystems and Oracle saw steep declines Monday.
Cisco, Gold said, is just above a crucial support level at $50 -- which was touched in intra-day dealings Monday. This support level corresponds to the 200-day moving average as well as a 62 percent retracemnet of the stock's gains from the October 1998 lows to the March 200 highs. On Monday, Cisco fell 2 3/16 to 51 1/4.
Should $50 be penetrated, Gold added, the next support level would be found at $45. If Cisco can hold the $45 level and rebound significantly from there in the coming months, he believes the networking giant will be the leader in the Nasdaq's next move higher.
The Standard & Poor's 500 Index lost 2.1 percent while the Russell 2000 Index of small-capitalization stocks fell 3.7 percent.
Separately, Trim Tabs said inflows slowed as equity funds took in about $1.7 billion in the three days ending May 18 for a monthly rate of $13.2 billion. Technology funds lost $34 million though small-cap funds had a small inflow.
Volume came in at 475 million on the NYSE and at 896 million on the Nasdaq Stock Market. Breadth was extremely negative, with decliners outpacing advancers by 19 to 8 on the NYSE and by 31 to 7 on the Nasdaq.
Specific movers
OnDisplay (ONDS: news, msgs) put on 2 1/4 to 55 1/2. Vignette announced Monday that it'll buy OnDisplay (ONDS: news, msgs) for $69.22 a share in a deal valued at $1.7 billion. The purchase will allow Vignette to add XML -- or extensible markup language -- capabilities to its e-business platforms. Vignette (VIGN: news, msgs) fell 8 1/2 to 35 5/16. Read the story. OnDisplay fell 3 1/4 to 50.
Merrill Lynch's Internet Infrastructure Holdrs (IIH: news, msgs), of which Vignette is a component, fell a heady 8 percent and is down 53.6 percent since it began trading in late February.
The Nasdaq Composite tumbled 188 points, or 5.6 percent, to 3,201 in midday trading while the Nasdaq 100 index fell 180 points, or 5.5 percent, to 3,079.
Active Software (ASWX: news, msgs) added 9/16 to 33 9/16. WebMethods is buying ActiveSoftware for about $45.85 per share in a stock deal valued at $1.3 billion in a bid to grow its reach in the business-to-business software category. WebMethods (WEBM: news, msgs) lost 11 3/4 to 75 1/4. See full story.
In other news, IBM (IBM: news, msgs) announced Monday new Web servers powered by the world's first production microchips made of silicon-on-insulator transistors and copper wiring. The silicon insulation can increase performance up to 30 percent. See full story. The Dow-component shed 5/8 to 105 13/16.
Treasury focus
Government issues gained mild ground in early dealings Monday, underpinned by the weakness in U.S. equity markets.
The 10-year Treasury note gained 15/32 to yield 6.43 percent and the 30-year bond climbed 1/2 to yield 6.17 percent. See Bond Report.
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Long-dated issues have been under the gun in recent weeks due to the market's heightened inflation worries while the short end has been held hostage by the Fed's tightening actions.
There's no economic news on tap for Monday. The week will be an excruciatingly light one on the data front, with only the revised gross domestic product and personal income and consumption numbers on tap. See economic calendar and forecasts and historical economic data.
In currency markets, dollar/yen lost 0.1 percent to 107.03 while euro/dollar rose 0.9 percent to 0.9047.
In the commodity market, June crude fell 79 cents to $29.10 while the Bridge CRB index climbed 1.61 to 224.96. View latest commodity prices.
Julie Rannazzisi is markets editor for CBS MarketWatch. |
