Market Update: Dow Is Lower After NYSE Resumes Trading
(Updated from 11:57 a.m. EDT)
The
New York Stock Exchange halted all trading for more than an hour this morning due to technical problems, finally reopening about 11:36 a.m. EDT. Tech bulls were down despite last night's upbeat words from
Intel
(INTC) - Get Report
, due to
Juniper Networks'
(JNPR) - Get Report
revenue warning and
Goldman Sachs'
negative note on chipmakers.
The tech-heavy
Nasdaq Composite Index stumbled lower and was lately off about 52 points, or 2.3%, to 2212. The
S&P 500 was down about 15 points, or 1.1%, to 1263.
The
Dow Jones Industrial Average lately was off 113 points, or 1%, to 10,978 -- below that key 11,000 level again. The
blue-chip index wasn't giving an accurate reading for most of the morning because the NYSE halted trading.
Problems at the NYSE began almost immediately after the opening bell, with more than half the stocks on the exchange affected. At 10:10 a.m., the exchange stopped all trading.
TheStreet.com
wrote a
separate story on the problems.
Trading volume in NYSE stocks on electronic exchanges was feather-light while the NYSE was down, and volume on the Nasdaq was slow in sympathy.
In Intel's long-awaited midquarter earnings update after the close yesterday, the chip king
reaffirmed its revenue targets for the second quarter. The company was upbeat about the PC sector and said it expects overall business to improve in the second half of this year.
But the chip sector was weak this morning after
Goldman Sachs
lowered Intel's fiscal 2001 and 2002 earnings forecasts. The brokerage also lowered forecasts for
National Semiconductor
(NSM)
-- which cut its earning guidance yesterday -- and
Lattice Semiconductor
(LSCC) - Get Report
, which dropped its earnings forecasts after the close yesterday.
Intel was falling 2.3% to $30.42. And the
Philadelphia Stock Exchange Semiconductor Index
was 2.9% lower.
Juniper was recently off 17.4% to $38.50 after saying that its second-quarter revenue would come in
significantly lower than expected -- around $200 million to $210 million instead of its previous guidance of $300 million to $330 million.
These days, the market tends to turn on a dime. "We're in a trader's market," said Fred Maudsley, managing director of trading at
Gruntal
, who suggested that yesterday's rally ahead of the Intel update was driven by momentum rather than fundamentals. Maudsley said he expects stocks to continue to move on individual news bits, but remain
range-bound in the near-term. "We've been in trading range for some time, and I think we're going to stay there."
Earnings warnings from tech companies sprouted like weeds overnight.
TranSwitch Semiconductor
(TXCC)
said last night that it expects to post a second-quarter loss instead of the previously expected profit; networking company
3Com
(COMS)
dropped its targets for fourth-quarter revenue; handheld-device maker
Handspring
(HAND)
cut its fourth-quarter revenue forecast; and Lattice Semiconductor gave its revised outlook. All were trading lower today.
It is the second-quarter earnings confession season, after all.
During confession season, companies "preannounce," or let the market know if they expect to miss performance targets. So far this confession season, earnings news from the heavy-hitters has been mostly negative.
Sun Microsystems
(SUNW) - Get Report
last week warned that it would miss second-quarter targets. PC maker
Hewlett-Packard
(HWP)
Wednesday
cautioned that a global slowdown in information technology could hurt its revenue. Financial powerhouse
J.P. Morgan Chase
(JPM) - Get Report
said it expects revenues in the remaining quarters of this year to be lower than its first-quarter results because of poor market conditions. And
Broadcom
(BRCM)
said its revenue
would fall short of expectations in the second quarter.
But there have also been some encouraging words from companies other than Intel, such as chipmaker
Xilinx
(XLNX) - Get Report
. The stock lately was down 5.2% to $46.81.
In April, investors pumped up stocks significantly as they bet that corporate earnings would improve in the third quarter. But now a consensus seems to be forming that a recovery won't happen until the fourth quarter of this year or early next year. The
Federal Reserve has cut interest rates five times this year in a bid to get a sluggish economy back on its feet.
The major stock market indices have been trading in a range since early May. Volume was thin much of the week ahead of Intel's report. The Dow is now up 18.1% from its March 22 low of 9389.48, while the Nasdaq is ahead 38.1% from its recent low on April 4 of 1638.8.
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