Stock Market Blitzkrieg Continues; Dow, Nasdaq Near Day's Lows

It's like death from above, as the stock market is collapsing under the weight of selling pressure. Four times as many stocks are down as up on the New York Stock Exchange and seven times as many on the Nasdaq Stock Market.

Today's pounding has traders and strategists again surmising that the market is nearing its bottom, but emotionally, few are willing to go out on a limb and make that call.

Major Indices INDEX CHANGE % VALUE Dow -320.56 -2.93% 10,602.99 S&P 500 -49.04 -3.40% 1391.47 Nasdaq -245.21 -6.67% 3431.57 Russell 2000 -17.14 -3.50% 472.08 TSC Internet -72.16 -8.88% 740.86 BOND CHANGE PRICE YIELD 30-Year Treasury -3/32 106 10/32 5.822% Market data as of: 12:45 PM EDT, Fri Apr 14 2000

"If all the hype about the bear market is reality going forward, that would clearly put a whole different complexion on what going on," said Ciaran O'Kelly, trader at Salomon Smith Barney. "As opposed to the 'we're bottoming, buy the dip,' what we're seeing right now is a bloody massacre and it's not taking prisoners."

Nothing has been immune to the pain this morning. The Dow Jones Industrial Average is down 320.56 to 10,602.99, a 2.93% decline, and the S&P 500 was off 49.04 to 1391.47. The Nasdaq Composite Index is down 245.21 to 3431.57, a 6.67% decline, and it's off more than 31% from its all-time closing high of 5048.62. The Nasdaq and Dow, it should be noted, are near their worst levels of the day.

The hardest hit sectors have been the brokerages, Net stocks, semiconductors and other technology stocks, but nearly every sector (except maybe gold) is getting destroyed. By early afternoon, only one (ExxonMobil (XOM), by the way) of the 30 Dow industrials were in positive territory.

CPI Sets the Stage

This morning's core Consumer Price Index, which rose 0.4%, doubling expectations, headed off at the pass the few buyers who were poised to try and take the market up at the open. The overall CPI rose 0.7% in March, due to higher energy costs. Since then, it's been nothing but ugly. After the initial flurry of selling, the market attempted to rally back, but those who bought in are regretting it now.

"I thought it was bottoming out earlier this week, but the bottom is always deeper than what you think," said Doug Myers, vice president in equity trading at IJL Wachovia. "It doesn't feel good -- it forces a lot of people to sell positions they may not want to sell."

The Morgan Stanley High Tech 35 was lately down 6.3% and the Philadelphia Stock Exchange Semiconductor Index was off 8%. Big-cap technology stocks were down, led by the likes of Dow component Microsoft (MSFT), down 5.3%, and the Nasdaq's most active, Cisco (CSCO), down 6.8% on 70 million shares.

Banks and brokerages are being hurt by renewed inflation worries, with the American Stock Exchange Broker/Dealer Index off by 9.5% and the Philadelphia Stock Exchange/KBW Bank Index lost 5.6%.

TheStreet.com Internet Sector index continues to get blitzed, off 8.88% today, after losing 22.7% of its value for the first four days of the week. The NYSE's most active is America Online (AOL), off 4 1/4 to 55 on 18 million shares.

Small- and mid-cap stocks are getting hurt too. The Russell 2000 is off 17.14 to 472.08.

That every sector is getting hurt now is a marked change from the earlier part of this month, when the Nasdaq's pattern was often divergent from Dow stocks. Earlier this week, large-cap tech names had managed to dig in reasonably well despite the swoon in the Nasdaq -- and many "Old Economy" sectors were holding up despite technology's woes.

"Going up to about a day-and-a-half ago you had many sectors performing well," said Steven Goldman, market strategist at Weeden. "Consumer and cyclical stocks were up 8% to 9% during that two week span, and if you tech out a lot of sectors were doing quite well, despite the pullback."

A day like this brings out a lot of contrarian wisdom. People are trying to point to the recent increase in the Chicago Board Options Exchange volatility index, or the VIX, as an indicator that a bottom is being reached. The VIX, a leading indicator of investor fear, today traded as high as 41.13, and it hasn't been this high since October 1998 -- right before the end of that market sell-off.

The ratio of put options to call options is also considered high, which means investors are scared enough to take steps to protect themselves (a put makes you money on the way down while a call makes you money on the way up).

"You've got to think that (the VIX) may signal we're getting close to a bottom," said O'Kelly. "But the problem is, that's been going on for a week. Unfortunately, the psyche of most investors has been damaged. As opposed to a nice V bottom, the market has gone down, down, down."

Goldman said this morning that "We're in this panic, and we should be able to try by early next week to be out of this mode."

But traders like to link a bottoming with an extremely heavily traded day, when investors who had remained on the sidelines and limited themselves to careful, strategic selling throw up their hands and sell into the market. Volume isn't low -- the Nasdaq had reached about a billion shares right around noon, but New York Stock Exchange volume isn't quite as strong.

The feeling among traders is that it's good, but not quite good enough, unless trading gets a bit heavier in the afternoon.

"The bottom is not confirmed by the volume," said Bill Schneider, head of U.S. equity block trading at Warburg Dillon Read. "But the trend of (increasing volume this week) has been encouraging. Technically, I should be encouraged...but I'm not encouraged by anything."

Market Internals

Breadth was horrific on strong volume.

New York Stock Exchange: 487 advancers, 2,391 decliners, 659 million shares. 13 new highs, 79 new lows.

Nasdaq Stock Market: 504 advancers, 3,711 decliners, 1.351 billion shares. 5 new highs, 414 new lows.

>To order reprints of this article, click here: Reprints