With Confidence Lacking, Traders Sell Tech Hard

The aftermath of biting into a soggy beef-filled taco would've been cleaner than the market's performance today.

And the performance of the Nasdaq Composite Index and the Russell 2000 wasn't just sloppy -- it was downright awful.

Major Indices INDEX CHANGE % VALUE YR TO DATE Dow -89.74 -0.81% 10,936.11 -4.9% S&P 500 -16.13 -1.06% 1507.73 +2.6% Nasdaq -124.67 -2.51% 4833.89 +18.8% Russell 2000 -14.61 -2.55% 559.04 +10.8% TSC Internet -43.88 -3.48% 1217.09 +5.4% TSC New Tech 30 11.37 -1.39% 806.13 +30.5% NOTE CHANGE PRICE YIELD 10-Year Treasury +9/32 102 17/32 6.153%

Well before the opening bell, the market was actually on the way to a firm session. Stock index futures were indicating a positive open for the market, but that changed quickly on news that influential strategist Abby Joseph Cohen of Goldman Sachs cut her recommendation for stocks in her model portfolio. Word of Cohen's move to slice her recommended exposure to stocks by 5 percentage points to 65%, while upping cash by the same amount, sent futures tumbling. Cohen's model portfolio now looks like this: 65% equities, 27% fixed-income, 5% cash and 3% commodities.

Cohen, in a note, did add that she still expects "the S&P 500 to easily reach 1575 by year-end 2000 and 1625 within 12 months."

The news of the allocation cut soured the market's mood and led to selling out of the gate. Cohen's allocation altering also took some of the blame for the pressure the market was under for the rest of the session.

Also, Cohen wrote that "as a consequence of relative performance, we no longer are overweight in technology or consumer staples. Financials have been assigned the largest recommended overweight relative to S&P 500. Other overweights include pharmaceuticals and selected basic materials and energy-related stocks."

TheStreet.com took a look at some other Wall Street strategists' recommended allocations in a story this afternoon.

Intel, Sun Help to Whack the Comp

In the end, major stock proxies closed the session softer, with the biggest losses suffered by the Nasdaq Comp and the Russell 2000.

The Comp tumbled 124.67, or 2.5%, to 4833.89. Sizable stumbles in shares of Intel (INTC Quote) and Sun Microsystems (SUNW Quote) helped doom the Comp. Also, deep losses in Internet, telecommunications, semiconductor and computer-related stocks dragged on the Comp.

Shares of Microsoft (MSFT Quote) gained a bit after getting hammered yesterday. TheStreet.com/NYTimes.com joint newsroom reported on Judge Thomas Penfield Jackson's move to delay his verdict for up to 10 days as the company continues to seek a settlement in with the government. Microsoft rose 1/4 to 104 5/16 but traded as high as 107 7/16 earlier.

Scott Curtis, senior equity trader at Brown Brothers Harriman, said the market was dealing with a bunch of cross currents, including some churning before the end of the quarter, some window-dressing and the negative influence of Cohen's allocation action.

The Russell 2000 slumped 14.61, or 2.6%, to 559.04.

Watching Key Support Levels

Meanwhile, the Dow Jones Industrial Average gave up 89.74, or 0.8%, to 10,936.11. Reflecting the action in the market, the Dow's tech components weighed heavily on the average. Intel, Hewlett-Packard (HWP Quote) and IBM (IBM Quote) were the biggest drags on the Dow.

Greg Nie, chief technical analyst at First Union Securities in Chicago, highlighted some key support levels going forward for the market. For the Dow, he pointed to 10,818, its 200-day moving average, and 10,625, the gauge's 50-day moving average. Nie cited 4400 to 4500 as important for the Comp.

The S&P 500 shed 16.13, or 1.1%, to 1507.73.

TheStreet.com Internet Sector index said goodbye to 43.88, or 3.5%, to 1217.09. The biggest loser in the DOT was eBay (EBAY Quote), which tumbled 16, or 6.7%, to 223 13/16.

TheStreet.com New Tech 30 surrendered 11.37, or 1.4%, to 806.13. The TSC New Tech 30, unveiled Jan. 5, is a market-cap-weighted index focused on tracking the most scorching part of the market, the magnet for Wall Street's hot money. A list of the index components is available at http://www.thestreet.com/newtech/.

In the fixed-income world, Treasuries didn't provide much excitement, although the market ended the session higher. The 10-year note was up 9/32 to 102 17/32, yielding 6.15%. The 30-year Treasury bond was up 3/32 to 103 27/32, putting its yield at 5.97%. (For more on the fixed-income market, see today's Bond Focus.)

Sector-wise, airline stocks hopped. The American Stock Exchange Airline Index rallied 4.3%. UAL (UAL Quote), parent of United Airlines, gained 2 5/16 to 59 5/16 on a positive earnings outlook issued after yesterday's close.

Not hurting was the fact that crude oil futures sold off on the New York Mercantile Exchange.

Speaking of oil, oil service stocks slumped, while oil producers were little changed as the market awaited official word of the outcome of the big OPEC meeting in Vienna. The Philadelphia Stock Exchange Oil Service Index gave up 2.3%. The Chicago Board Options Exchange Oil Index fell fractionally to close at 272.90.

An Improving Mood Ahead

Looking ahead, Nie said he thinks investors' mood will improve in April. He said that feeling in the market will be provided by the positive background of the upcoming earnings season and on the perception stemming from positive retirement-account inflows.

Whether the market can turn that constructive mood into a tradable rally is another thing, the technician said. For that to happen, Nie said, the market needs to put up some stronger breadth statistics.

In New York Stock Exchange trading, 955 million shares were exchanged while declining stocks beat advancers 1,656 to 1,351. In Nasdaq Stock Market action, 1.5 billion shares traded while losers defeated winners 2,765 to 1,522. New 52-week lows edged new highs 59 to 55 on the NYSE while new lows beat new highs 95 to 62 in over-the-counter trading.

Volume, compared with the way it's been running this year, was light, said Curtis of Brown Brothers Harriman. Now a day of sub-billion-share volume on the Big Board is kind of a light day, he said.

Among other indices, the Dow Jones Utility Average fell 6.35, or 2.2%, to 284.35; the Dow Jones Transportation Average rose 13.16, or 0.5%, to 2680.97; while the American Stock Exchange Composite Index fell 7.36, or 0.7%, to 1016.51.

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