Not even a mother could love today's stock market; many are probably on the phone chewing out their brokers at this moment. Today was the worst performance by the market so far this month, as money managers sold brokerage stocks, technology names, and everything in between. Losers outpaced winners three-to-one on both the New York Stock Exchange
and the Nasdaq Stock Market
.
| Major Indices | | INDEX | CHANGE | % | VALUE | YR TO DATE | | Dow |  
118.48 | -1.1% | 10,808.52 | -6.0% | | S&P 500 |
21.30 | -1.5% | 1444.51 | -1.7% | | Nasdaq |
108.71 | -2.8% | 3726.52 | -8.4% | | Russell 2000 |
14.20 | -2.7% | 516.68 | +2.4% | | TSC Internet |
30.81 | -3.8% | 772.58 | -33% | | NOTE | CHANGE | PRICE | YIELD | | 10-Year Treasury |
5/32 | 99 3/32 | 5.871% |
|
The damage rings up like this: the Dow Jones Industrial Average
was led into a chasm by
J.P. Morgan (JPM Quote - Cramer on JPM - Stock Picks), a consistent loser since the announcement of its merger with
Chase Manhattan (CMB Quote - Cramer on CMB - Stock Picks) last week.
The Dow lost 118.48 to 10,808.52, as J.P. Morgan contributed 46 points of downside. The Nasdaq Composite Index
fell 108.71 to 3726.52; the S&P 500
dropped 21.30 to 1444.51, and the small-cap Russell 2000
dropped 14.20 to 516.68.
Carnage was most easily identifiable in the technology sectors. Ongoing concerns about declining demand from the Internet and PC-makers has picked up in recent days and accelerated the Nasdaq's decline.
"Anything you can think about as a possible worry is a worry right now," said Sam Ginzburg, senior managing director of equity trading at
Gruntal. "Everyone is focused on some kind of worry."
Not that investors don't have the ammunition for which to pull the trigger. Earnings warnings from the likes of
SCI Systems (SCI Quote - Cramer on SCI - Stock Picks) and analyst downgrades of
IBM (IBM Quote - Cramer on IBM - Stock Picks) and
Intel (INTC Quote - Cramer on INTC - Stock Picks) have only heightened the market's concern about a slowdown in global growth.
Because of the central necessity for chip technology, the
Philadelphia Stock Exchange Semiconductor Index serves as a good proxy for market sentiment. Frank Gretz, technical analyst at
Shields, believes the recent woes suggest that the market is looking for a slowdown in global demand. That index fell 2.4% today and has suffered through September, losing 17.5%. At 951.2, it's nearing technical support levels, according to Gretz.
"When business slows down, it slows down, and maybe that's what these guys are seeing," said Gretz. "The whole sector is suffering a bit. Tech-land is not looking too good from here."
Big-cap technology stocks are also approaching those levels.
Cisco (CSCO Quote - Cramer on CSCO - Stock Picks), is going nowhere, and
Oracle (ORCL Quote - Cramer on ORCL - Stock Picks), despite a good earnings call last week, is also struggling. Cisco lost $2.69 to $60.06 today, and Oracle dropped $1.84 to $76.47.
The caveat here is that this kind of sluggish action, dominated by nail biting, is typical of pre-announcement season. The market is faced with tough earnings comparisons this quarter, as growth accelerated in the second half of last year. While the number of negative pre-announcements overall is still less than the historical average, warnings have been issued by a number of prominent companies. If growth is slowing, high valuations isn't going to sit well with investors.
Valuation "certainly appears to be the obsession," said Jack Shaughnessy, chief market strategist at
Advest. "With high multiples, people don't have much patience. High price-to-earnings ratios are not a problem if earnings growth goes along with expectations."
A number of momentum-driven names also came under significant pressure, including
Corning (GLW Quote - Cramer on GLW - Stock Picks), which lost $8.50 to $290, and
Juniper (JNPR Quote - Cramer on JNPR - Stock Picks), losing $9.69 to $192.
TheStreet.com Internet Sector index was marked for death today, falling 3.8%.
Oil Makes Stocks Smell Like Vinegar
Investors also continue to worry about fuel costs. Oil prices breached the $36 mark today, and while higher oil prices are a serious issue for only a number of companies, they're a minor issue for a slew of companies, many of whom have some kind of fuel needs. Consumers, of course, are also in need of fuel, and higher energy prices are cutting into consumer spending.
The
Dow Jones Transportation Index was sent for a ride thanks to multiple downgrades of air carrier
Delta (DAL Quote - Cramer on DAL - Stock Picks). Delta lost $1.19 to $45.81 today, and the transport average was off by 2%. The
American Stock Exchange Airline Index fell 2.8%.
The
Morgan Stanley Cyclical Index fell 1.5% today, and the
Morgan Stanley Consumer Index dropped 0.6% today. Industrial stocks were hurt by an earnings warning from
Rockwell International (ROK Quote - Cramer on ROK - Stock Picks), which cited declining demand for its warning, issued earlier today. That stock lost $7.69, or 20%, to $30.50 today.
Finally, the brokerage stocks, which had provided leadership as merger mania engulfed that sector, abdicated leadership today.
Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks) lost $8.13 to $134.88 and
Bear Stearns (BSC Quote - Cramer on BSC - Stock Picks) dropped $4.88 to $60. The
Amex Broker/Dealer Index lost 4.5%.
Market Internals
Breadth was crap-tacular on middling volume.
New York Stock Exchange
: 684 advancers, 2,215 decliners, 956 million shares. 87 new 52-week highs, 107 new lows.
Nasdaq Stock Market
: 1,099 advancers, 2,977 decliners, 1.58 billion shares. 60 new highs, 149 new lows.
Back to top Most Active Stocks
NYSE Most Actives Nasdaq Most Actives Back to top Sector Watch
Pick a sector, and it wasn't doing anybody any favors today. The
Nasdaq Biotechnology Index and its cast of high-flying wunderkinds was foul, losing 5.2%, led into the abyss by
Protein Design Labs (PDLI Quote - Cramer on PDLI - Stock Picks), which dropped 12.5%.
Back to top Bonds/Economy
The disinversion of the Treasury yield curve continued today, with the 30-year Treasury bond's yield now higher than the five-year note's for the first time since January.
This is happening because Treasury prices are mixed. Long-maturity issues are lower in price, causing their yields to rise relative to those of the short-maturity issues, which are little changed.
This continues a trend that emerged last week based on two key assumptions. First, that the Fed
is through hiking interest rates, and may even cut the fed funds rate
in the next several months if rising energy prices cause economic growth to slow too much. Investors typically push up long-term yields relative to short-term ones when they expect the Fed to take action to stimulate economic growth.
Second, that Election Day could spell the end of the policy of using federal government surplus funds to pay down the national debt by buying back mainly long-maturity Treasuries from investors, inflating their value relative to shorter-term Treasuries.
The benchmark 10-year Treasury note lately was down 5/32 at 99 3/32, lifting its yield to 5.871%.
Back to top International
The
FTSE 100 ended down 7.10 to 6410.20. Across the channel, the
CAC 40 in Paris ended down 92.27 to 6522.38, and the
Xetra Dax in Frankfurt finished off 107.85 to 6891.69.
Japan's
Nikkei 225 index shed 152.12 to close at 16,061.16. In Tokyo currency trading, the greenback fell slightly lower against the yen to fetch 107.02. It was lately trading at 106.90. Korea's key
Kospi index dropped 50.64, or 8.1%, today to close at 577.56. Hong Kong's
Hang Seng index fell 689.37, or 4.2%, to stand at 15,560.16, largely on concerns over higher oil prices and the weakness in the euro.
Back to top
David Gaffen
RSS
