<FONT COLOR=BLUE>MARKET SNAPSHOT--Jittery investors hammer shares
Strong jobs report, profit worries weigh
By Julie Rannazzisi, CBS.MarketWatch.com
Last Update: 1:53 PM ET Oct 6, 2000
NEW YORK (CBS.MW) - Nervous investors, hurt by the recent slew of profit warnings and Friday's solid employment report, slammed stocks, pushing the major averages 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 jobs report, he said, makes it more unlikely for the Fed to shift to a neutral stance on rates when it meets in November.
There's tremendous uncertainty on whether the landing for the U.S. economy will really be a "soft one," Zimmerman added. "It's not a constructive environment for stocks," he remarked.
"Investors are being rewarded to sell on weakness. It's a different market compared to the one we've seen in recent years, when the buy-the-dip mentality ruled," Zimmerman said. "This is a market where you have to be nimble."
Inside the tech segment, Internet, chip and networking shares saw the more aggressive selling pressure. All sectors, with the exception of the defensive utilities, fell deep in the red. The interest-rate sensitive financials took a veritable beating, with brokerage stocks tumbling. Also sharply lower: biotech and retail stocks.
The Dow Jones Industrials Average ($DJ) tumbled 122 points, or 1.1 percent, to 10,603.
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 119 points, or 3.5 percent, to 3,353 while the Nasdaq 100 Index ($NDX) lost 112 points, or 3.3 percent, to 3,311.
The Standard & Poor's 500 Index ($SPX) gave up 1.9 percent while the Russell 2000 Index ($RUT) of small-capitalization stocks lost 2.1 percent.
Volume came in at 694 million on the NYSE and at 1.11 billion on the Nasdaq Stock Market. Market breadth was shabby, with decliners outpacing advancers by 17 to 10 on the NYSE and by 28 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
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 concern 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.
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 noted. "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."
Within 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.
Sector 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.
Among the equipment makers, KLA-Tencor (KLAC) fell 7.2 percent to $35.38 and Teradyne (TER) relinquished 4 percent to $31.56 and Applied Materials (AMAT) shed 6 cents to $53.06.
Computer hardware stocks, badly bruised on Thursday, saw additional losses Friday. The Goldman Sachs Computer Hardware Index ($GHA) fell 1.4 percent. But 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 and Apple Computer (AAPL), which saw its shares halved last Friday following its earnings warning, rose 75 cents to $22.81.
The financial sector was the hardest hot within the broad market, with the S&P Bank Index ($BIX) off 4.2 percent while the Amex Securities Broker/Dealer Index ($XBD) plunging 5.5 percent.
Bear Stearns (BSC) was among the hardest hit, sliding 8 percent to $58.50. Rating agency Standard & Poor's revised its outlook on the stock to "negative" from stable." Also in a rut were shares of Charles Schwab (SCH), down a heady 8.4 percent to $31.50 and Merrill Lynch (MER), off 8.2 percent to $60.94.
Treasury action
Bond prices recovered after an early downdraft as plunging equity prices produced a bid in the government market.
The 10-year Treasury note gained 6/32 to yield ($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. |
