Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: prophet_often who wrote (35332)	9/19/2000 12:18:42 AM
From: Smart_Money	Respond to of 57584

Cream always goes to the top and this thread is one of the best if not the best.

To: prophet_often who wrote (35332)	9/19/2000 12:45:18 AM
From: Softechie	Read Replies (1) \| Respond to of 57584

Nasdaq Hurt By Fear Of Slowing Economy's Effect On Tech ------------------------------= DJ Nasdaq Hurt By Fear Of Slowing Economy's Effect On Tech 18 Sep 18:45 By Peter Loftus Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--September has not been kind to the Nasdaq Composite Index because investors believe the recent U.S. economic slowdown is hurting technology companies. The Nasdaq index has fallen 11% since Aug. 31, closing Monday at 3726.52, down 108.71 for the day, or 2.83%. The retreat has erased August's gains and disappointed investors who had hoped that the passing of Labor Day would spark a rally in tech stocks. The index is off more than 8% year-to-date and more than 25% below its March peak. Whereas investors once punished tech stocks on fears of impending interest rate hikes by the Federal Open Market Committee, now the market is sending the sector down on the intended result of those rate hikes: an economic slowdown. The latest data, released Friday, showed that retail sales were slower than expected in August, new unemployment claims were up two weeks ago, and wholesale prices fell in August. Although some market watchers have argued that the tech sector is immune to economic slowdowns, other strategists say the deceleration will hurt tech company earnings and revenue. "The tech sector is still sensitive to the belief that as the U.S. economy slows, capital spending will slow, and that will impact earnings for this quarter and the next quarter," said Alan Ackerman, chief market strategist at Fahnestock & Co. Economic conditions outside the U.S. could be hurting tech stocks, too. The decline in the Euro's value might cut into the earnings of some tech firms with substantial overseas exposure, Ackerman said. Some Old Economy companies have already warned of the negative effect of the Euro. The Nasdaq's recent slide is providing investors a dose of reality after premature gains in August, said Ned Riley, market strategist at State Street Global Advisors. Trading volumeswere light in August as investors vacationed, which gave an artificial boost to tech stocks, he said. In Riley's view, August's surge in tech stocks represented too rapid a recovery from the Nasdaq's May lows, glossing over serious problems in the sector. Riley cited a list of recent developments that tech investors should ponder: a slackening in demand for wireless handsets, the expensive bids in Europe's wireless auction and softness in demand for personal computers. Moreover, the shares of some tech leaders are on a precarious perch. Even after this month's declines, a group of about 15 large-capitalization tech stocks trade at an average multiple of 110 times projected 2001 earnings, Riley. That leaves little room for error, and even the slightest sign of weakness in one of these companies' quarterly results could hurt the sector. Shares in Oracle Corp. (ORCL), the software maker, have fallen 10% since it reported first-quarter results Thursday that revealed lower-than-expected growth in the company's applications business. "We've got a group of securities that are living in a very tentative state in terms of confidence," Riley said. For the rest of the year, Riley believes the Nasdaq index will sink further, eventually approaching the 3000 level it touched in May. Then, it should rebound, ending the year around 3700, Riley predicted, off 9% for the year. The recent declines mean that there are bargains to be found in the tech sector. Riley said some telecommunications shares have been "unmercifully beaten up," and would make good purchases at recent levels. These include Verizon Communications (VZ), which closed Monday at $43.38, down $1.13 and well off its 52-week high of $69.50. Chris Bonavico, manager of the TransAmerica Premier Aggressive Growth Fund, is more bullish about the tech sector. He said there are too many momentum players in the stock market, who sell excessively when the Nasdaq is ailing but don't pay attention to the fundamentals of individual companies. In Bonavico's view, the New Economy is in its infant stages, and investors should pick out tech stocks that will do well over the long-term. He recommends EMC Corp. (EMC), InfoSpace Inc. (INSP) and RF Micro Devices Inc. (RFMD). -Peter Loftus, Dow Jones Newswires; 201-938-5267; peter.loftus@dowjones.com (END) DOW JONES NEWS 09-18-00 06:45 PM