Someday, perhaps weeks from now, you'll be able to tell your children about the famous bear market that hit technology stocks in early April.
By midday, traders had abandoned all hope for a rebound from yesterday's 350-point bleeding in the
Nasdaq Composite Index
. Old tech, new tech, biotech, you name it: Intense and indiscriminate selling in a wide range of electronically traded issues was accelerating to a pace that many observers were finding extremely unsettling.
"It's getting to be a very emotional day," said Barry Hyman, chief market strategist at
Ehrenkrantz King Nussbaum
. "This is getting quite nerve-racking. And it makes it even more nerve-racking to see that occurring at the same time that the
are rallying. Up until two weeks ago, this was a tech market with no thought of going elsewhere."
No longer. The Nasdaq had lately lost 427, or 10.1%, to 3796, an astonishing 24.8% down from the closing high of 5048.62 set just a few weeks ago. Technically speaking, the Nasdaq is in a bear market. (And those numbers are a little old, of course. It's impossible to keep up, but the Nasdaq was down about 575 right before this story was posted.)
The selling was spreading to blue-chips, which, until around noon, were managing to hold onto the pile of gains they've garnered during the market's recent rotation out of tech. The
Dow Jones Industrial Average
was off 378, or 3.4%, to 10,843.
The Dow was getting decent performances from old-line stocks like
Procter & Gamble
. But a general stampede out of financial stocks was knocking the stuffing out of Dow components
J. P. Morgan
Traders remained relatively cool amid the fury, showing the sort of poise that can only come from playing with someone else's money.
"There's a calmness to it," said Jim Herrick, managing director of trading
Robert W. Baird
in Milwaukee. "But every downdraft makes people more nervous. A critical level is 4000. We definitely want to hold that."
'I don't find any consolation in being up 8% for the year when I was up 23% before,' said Barry Hyman of Ehrenkrantz King Nussbaum. 'That's lost money. I know that's market volatility, but I do find it becoming increasingly difficult to remain calm.'
There are signs that many retail players are a bit more ruffled than Herrick, though. Trading desks were once again abuzz with word of margin-call selling, evident today in the sharp selloff in many technology stocks just after 11 a.m. EDT. Meanwhile, the weekly sentiment survey conducted by the
American Association of Individual Investors
shows a striking increase in bearishness among individual investors. In the latest survey, conducted Wednesday, 50% of respondents said that they were bearish, well up from the 17% who claimed the same a month earlier.
One thing is clear: The sharp and unexpected swing in investor sentiment has both retail and professional players struggling to come up with a strategy that works.
"There are a lot of emotions out there," said Hyman. "I don't find any consolation in being up 8% for the year when I was up 23% before. That's lost money. I know that's market volatility, but I do find it becoming increasingly difficult to remain calm.
"And I'm not calm, because I know there are buyers out there. I'm trying to rein back the emotion and put that aside."
Semiconductor stocks were getting slammed, with the
Philadelphia Stock Exchange Semiconductor Index
off 9.8%. The weakness among SOX components was broad, but particularly concentrated in momentum darling
, which was lately down 30 7/8, or 12%, to 226 1/16.
The intense shakeout continued unabated among Internet stocks, which has been reeling since
slammed the sector on cash-flow issues back in mid-March.
TheStreet.com Internet Sector
index was down 143, or 14.3%, to 855.
was the biggest loser on the DOT, shedding 47 7/16, or 28.9%, to 120.
The momentum reversal in smallish-cap stocks, which were perhaps the main instrument of the Nasdaq's run to the 5000 level, was even more intense. The
was tanking 40, or 7.8%, to 476.
"Those stocks are not going to go from 90 back to 300," Hyman said. "It may be difficult to make the case for 5000 now because of the loss of biotech and the small- to mid-cap stocks."
As is its habit, the bond market was gleeful at the damage in equities. The benchmark 10-year note had moved up 51 ticks to 105 17/32, putting its yield at 5.76%.
Breadth was atrocious on very strong volume.
New York Stock Exchange:
829 advancers, 2,136 decliners, 868 million shares. 47 new 52-week highs, 51 new lows.
Nasdaq Stock Market:
565 advancers, 3,679 decliners, 1.6 billion shares. 17 new highs, 297 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.