TSC Weekender
TSC Weekender: Riding the Big Bad Wave
04/08/00 - 09:00 AM EDT
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I Go Crazy
The market had a psychotic break on Tuesday, not that you could really tell by the rest of the week. The week began inauspiciously with Judge Thomas Penfield Jackson's ruling that Microsoft MSFT had violated U.S. antitrust laws. Shares of Bill's outfit staggered 15% in advance of the ruling, which came after the close. (See our index page for a full roundup of Microsoft antitrust coverage.) Then Tuesday came and the market cracked up. The Nasdaq slid as much as 13.6% at one point -- nearly 575 points. Now that tech stocks "have become the national plaything," as one analyst told TSC earlier in the week, many investors were caught with their diversification down. With more and more investors buying stocks on margin (in effect borrowing from their broker to buy stock), margin calls are suspected of contributing to the severe declines. (Most brokers will lend customers money to pay for up to 50% of a stock's value. But when the value of the stock falls to a certain level, brokers tell customers to put up cash or securities to keep the borrowed funds at about 30%.) At day's end, however, the Dow and Nasdaq got a grip and posted modest losses. The Nasdaq closed down a relatively tame 74.79, or 1.8%, to 4148.89. (Learn more about margin calls and what happened here.) The rest of the week, the indices inched up. A benign jobs report on Friday sent out good vibes, and on the relatively light day ahead of earnings, traders seemed to experience amnesia. Those who were around stampeded into tech stocks, lifting the Nasdaq 178.89 to finish at 4446.45. Kayte VanScoy, special to TheStreet.com, contributed to this piece.
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