Too all AMAT longs, it's times like these when one develops an Iron Stomach, something necessary for future investing in this sector. Remember that what doesn't kill you will make you stronger. Feb was the 3rd worst month in Nasdaq history.....
Stocks Fall, Nasdaq Has Third-Worst Month
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Stocks spiraled lower on Wednesday, with the Nasdaq market wrapping up its third-worst month ever, after Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) quashed investors' hopes for an imminent interest-rate cut.
Greenspan said the U.S. economy appears to be slowing sharply, but left open the question of whether the Fed might lower rates again before its next scheduled meeting on March 20. That frustrated investors who had been gearing up for an interim half-percentage point cut in rates, said Kenneth Tyszko, a portfolio manager at Oberweis Asset Management.
``Mr. Greenspan came out today and indicated that cut may not be forthcoming anytime soon, at least prior to March 20, and that certainly disappointed the market,'' said Tyszko, who helps oversee $200 million in assets.
The technology-dominated Nasdaq Composite Index (^IXIC - news) lost 55.99 points, or 2.54 percent, to hit yet another two-year low at 2,151.83. The index ended February down 22.4 percent -- its third-worst month ever behind a 23 percent drop in November 2000 and a 27.2 percent drop in the October 1987 market crash.
The blue-chip Dow Jones industrial average (^DJI - news) tumbled 141.6 points, or 1.33 percent, to 10,495.28.
The broader Standard & Poor's 500 Index (^SPX - news) fell 18 points, or 1.43 percent, to 1,239.94, to rack up it lowest close in nearly two years. The broad market gauge was teetering on the brink of a 20 percent decline from all-time highs hit less than a year ago -- a move widely seen as marking a ``bear market.''
In testimony before the House Financial Services Committee, Greenspan said the economy appears poised for excessively slow growth.
``Equities respond to two things -- interest rates and earnings,'' said Alan Skrainka, chief market strategist at Edward Jones. ``His comments were very downbeat on the economy and that certainly is discouraging for the earnings outlook.''
Greenspan's remark that the slowdown in January and February was less severe than in late 2000, however, dimmed expectations for a rate cut ahead of the Fed's next meeting. The Fed has cut interest rates by a full percentage point so far this year to prop up the ailing economy.
``Investors are impatient,'' said Guy Truicko, equity portfolio manager at Unity Management. ``They want to see (cuts) now, because the earnings are terrible, especially in tech.''
Technology stocks led the market lower, weighed down by a fresh batch of profit warnings from the computer chip sector. The Philadelphia Semiconductor index (^SOXX - news) tumbled 4.92 percent.
Chartered Semiconductor Manufacturing Inc. (NasdaqNM:CHRT - news) lost $1-13/16 to $29-1/4 after the telecommunications chip supplier lowered its quarterly earnings and revenue expectations, citing weaker economic and market conditions.
Specialty chip maker Altera Corp. (NasdaqNM:ALTR - news) slipped 1/4 to $23-1/8 after warning that customers' high inventories and slow growth would result in disappointing revenues.
Communications chip makers were particularly bloodied as investors fretted the slowing economy would crimp spending on high-tech goods.
Semiconductor company Broadcom Corp. (NasdaqNM:BRCM - news) lost $4-3/8 to $49-1/4, and chip company Applied Micro Circuits Corp. (NasdaqNM:AMCC - news) fell $3-9/16 to $26-3/4. PMC-Sierra Inc. (NasdaqNM:PMCS - news) dropped $4-7/16 to $33-1/2.
Cisco Systems Inc. (NasdaqNM:CSCO - news), the world's No. 1 maker of gear that powers the Internet and the most active stock on Nasdaq on Wednesday, was down 5/16 at $23-11/16. JDS Uniphase Corp. (NasdaqNM:JDSU - news) (Toronto:JDS.TO - news), the world's No. 1 supplier of fiber-optics parts -- which recently announced it would cut 10 percent of its staff -- fell $1-1/16 to $26-3/4. Both led the Nasdaq lower.
Interest-rate-sensitive financial stocks got bruised as investors displayed their dissatisfaction with the Fed chief's comments. American Express Co. (NYSE:AXP - news), for example, slumped $1.56 to $43.88.
Manufacturing companies like Honeywell International (NYSE:HON - news), down $1.44 at $46.71, and retailers like Home Depot (NYSE:HD - news), off $2.10 at $42.50, also got battered, pushing down the blue-chip Dow average.
But pharmaceutical companies Johnson & Johnson (NYSE:JNJ - news), up $1.38 at $97.33, and Merck & Co. (NYSE:MRK - news), up 29 cents at $80.20, underpinned the Dow as investors poured money into stocks viewed as providing more stable earnings growth in an uncertain economic environment.
The latest economic numbers were far from soothing for investors worried that the economy's slowdown will pinch corporate earnings growth.
On Wednesday, the government released a revised estimate of fourth-quarter growth showing that the economy grew at an even weaker annual pace of 1.1 percent, compared with a previously reported 1.4 percent rate. That was the most sluggish growth since the spring of 1995. |
