<COLOR FONT=BLUE>MARKET SNAPSHOT--Nervous investors slam techs
Payrolls up 252K; jobless rate at 3.9%
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 11:43 AM ET Oct 6, 2000
NEW YORK (CBS.MW) - As has been the case in recent sessions, the major averages have been unable to hold on to early gains, with buyers fleeing at the drop of a hat Friday.
Nervous investors, scared in recent weeks by the deluge of profit warnings, zeroed in on the lower unemployment rate reported in the September employment numbers and pushed shares sharply lower.
"People were starting to get into a party mode on the Fed," said John Zimmerman, director of growth strategies at Banc of America Capital Management. Friday's labor report, he said, makes it more unlikely for the Fed to shift to a neutral stance on rates when it meets in November.
Non-farm payrolls rose by 252,000 in September versus the 235,000 expected by a survey of economists conducted by CBS MarketWatch.com.
"This report screams soft landing, especially when you adjust the numbers for the special effects [from Verizon and the census workers]," said Stuart Hoffman, chief economist at PNC Financial Services. "It's a very neutral report that [should] keep the Fed on the sidelines."
But the jobless rate fell to 3.9 percent in September, a 30-year low, compared to the 4.1 percent expected, which was also the rate seen in August.
The drop in the jobless rate is what's causing some distress in the market but, Hoffman added, it's been between a 3.9 to 4.1 percent range for the past months and hasn't broken out to new lows.
Inside the tech segment, Internet, chip and networking shares saw the more aggressive selling pressure. Most sectors in the broad market struggled, with only the defensive utilities, transportation, oil and oil service shares chiseling out gains. The interest-rate sensitive financials were hard hit, led by the brokerages, as were biotech and retail stocks.
The Dow Jones Industrials Average ($DJ) erased 88 points, or 0.8 percent, to 10,637.
Holding the Dow down Friday were steep losses in shares of Citigroup, Home Depot, AT&T and J.P. Morgan. Among the few upside movers were shares of DuPont, Exxon Mobil and IBM.
AT&T (T) fell 5.6 percent to $27.25. The company saw its shares downgraded by Salomon Smith Barney to an "outperform' from a "buy." See Rating Revisions.
The Nasdaq Composite ($COMPQ) subtracted 71 points, or 2.1 percent, to 3,400 while the Nasdaq 100 Index ($NDX) lost 79 points, or 2.3 percent, to 3,345.
The Standard & Poor's 500 Index ($SPX) gave up 1.3 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks lost 1.4 percent.
Volume came in at 337 million on the NYSE and at 551 million on the Nasdaq Stock Market. Market breadth turned negative, with decliners outpacing advancers by 13 to 10 on the NYSE and by 23 to 9 on the Nasdaq.
Separately, Trim Tabs said all equity funds posted inflows of $2.3 billion over the week ended Oct. 4 versus outflows of $3.8 billion in the prior week. Equity funds that invest primarily in U.S. funds saw inflows of $2.4 billion compared to outflows of $1.4 billion during the previous week.
Inside the jobs report
The employment report's closely-watched average hourly earnings figure rose by 0.2 percent versus the anticipated 0.3 percent rise. But September average hourly earnings were upwardly revised to show a 0.4 percent increase from the previously reported 0.3 percent. View Economic Preview, economic calendar and forecasts and historical economic data.
"We're seeing a trend of solid -- but not alarming -- job growth," Hoffman added.
"The economy is doing well, with a tight labor market but no signs of inflation. The silver lining is the [paltry] growth in average hourly earnings," Hoffman said.
Inside the payrolls figures, growth stood at 204,000 excluding the effects of the census workers and the Verizon strike. Job creation got its strength from the service sector in September, where 289,000 jobs were added. For 2000, average monthly payroll gains stood at 192,000 versus the 229,00 monthly average in 1999.
Specific movers
Profit warnings aren't letting up. Chip and optical equipment maker Veeco Instruments (VECO) said it sees third-quarter earnings-per-share of 18 to 22 cents, well below the First Call estimate of 40 cents a share. Moreover, the firm's president and chief operating officer, Christine Whitman, resigned. The stock nosedived $41.41, or 40.5 percent, to $61.13.
Computer hardware stocks, badly bruised on Thursday, recovered Friday, with the Computer Hardware Index ($GHA) up 1.6 percent. Dell Computer (DELL) inched up 75 cents to $25.94 following its near 11-percent plunge on Thursday in the wake of its earnings warnings. Apple Computer (AAPL), which saw its shares halved last Friday following its earnings warning, rose 75 cents to $22.81.
Treasury action
Bond prices recovered after an early downdraft as plunging equity prices produced a bid in the government market.
The 10-year Treasury note gained 6/32 to yield ($TNX) 5.84 percent while the 30-year bond put on 15/32 to yield ($TYX) 5.86 percent.
In the currency arena, dollar/yen slipped 0.3 percent to 108.80 while euro/dollar dipped 0.2 percent to 0.8672.
Julie Rannazzisi is markets editor for CBS.MarketWatch.com. |
