On a day like today, a person has to wonder what
Because it sure seemed like everything
Nasdaq Composite Index
rose above 5000 intraday for the first time; the front month crude-oil futures contract surged above $34 a barrel sending oil and oil service stocks flying;
Procter & Gamble
issued a profit warning that helped send the
Dow Jones Industrial Average
to its fourth-worst point drop ever; and
, a Web security company, agreed to buy
, the big Internet domain-name registration concern, for about $21 billion in stock.
The session started out well for major stock proxies overall, particularly for the Comp, which soared early on thanks in part to the announcement that VeriSign was buying Network Solutions. Also helping the market overall was word that fourth-quarter productivity rose at an annual rate of 6.4%, revised up from the previous estimate of 5%. Economists projected productivity would rise 6.3% in the fourth quarter, according to a
Stocks faded quickly from their early session highs, however. Then Procter & Gamble opened for trading about 40 minutes after the opening bell on the Big Board, and that's when things got heinous for the Dow. Once P&G started trading, the Dow went into freefall.
The Comp and the
held in pretty well through most of the rest of the day, until late in the session when they couldn't hold off getting dragged into the muck with the Dow and the S&P 500 and ended down sharply.
The Dow swooned 374.47, or 3.7%, to 9796.03, the lowest close since
March 31's 9786.16. P&G accounted for 136 points of negative influence in the Dow. Other notable losers in the average included
'No One Seems to Be Going Nuts'
Jay Suskind, head of institutional equity trading at
, said the saving grace for the Dow is that "no one seems to be going nuts," and the fact that it is 16% off its all-time closing high "should help cushion" the downside. "Hopefully that is what you'll see," he said.
Suskind pointed out that market players tend to overdo it on the upside and do the same on the downside. For example, on the Dow stocks lately, "they've certainly been overdoing it" on the sell side, while in tech, they've been overbuying, he said. Suskind said that when the selling does start in tech, the big question will be whether people will buy the dip or just say "let's get out."
Elsewhere, the S&P 500 tumbled 35.66, or 2.6%, to 1355.62.
As for the Comp, it fell 57.01, or 1.2%, to 4847.84. It had soared as high as 5006.78, an all-time intraday high.
The Russell 2000 gave up 6.17, or 1%, to 595.47.
TheStreet.com Internet Sector
index slipped 3.44, or 0.3%, to 1249.30.
As for oil, the April crude oil futures contract closed up $1.95 to $34.13 a barrel on the
New York Mercantile Exchange
. The spike in oil prices sent oil and oil-service stocks flying. The
Chicago Board Options Exchange Oil Index
soared 7.2%, while the
Philadelphia Stock Exchange Oil Service Index
Philip Roth, chief technical analyst at
Morgan Stanley Dean Witter
, reiterating a call he made
Feb. 24, said he still likes energy stocks. "That whole group looks good," he said. He said the oil service, drillers, oil refiners, exploration and production and integrated oil companies look good.
The rally in oil, fed by fears of dwindling supply helped those stocks, on the other side were the transportation and airline stocks, which got crushed because of the surge. The
American Stock Exchange Airline Index
swooned 5.6%, while the
Dow Jones Transportation Average
tumbled 112.50, or 4.7%, to 2263.59.
In the fixed-income world, Treasuries were mixed. The 10-year note was up 8/32 to 100 29/32, yielding 6.375%. The 30-year Treasury bond was down 1/32 to 101 12/32, putting its yield at 6.15%. (For more on the fixed-income market, see today's
New York Stock Exchange
trading, 1.309 billion shares were exchanged while declining stocks beat advancers 2,075 to 968. In
Nasdaq Stock Market
action, 2.129 billion shares traded -- the fourth-heaviest trading session ever -- while losers defeated winners 2,567 to 1,765. New 52-week lows beat new highs 301 to 111 on the NYSE while new highs beat new lows 415 to 128 in over-the-counter trading.
Among other indices, the
Dow Jones Utility Average
fell 0.81, or 0.3%, to 279.99, while the
American Stock Exchange Composite Index
fell 5.42, or 0.5%, to 1016.94.
NASD Seeks Decimalization Delay
National Association of Securities Dealers
, which owns and operates the booming Nasdaq Stock Market, has asked federal regulators to postpone until next year a requirement that stocks be traded in decimal increments, supplanting the current system of prices that is based on fractions of a dollar.
"The prudent thing to do is to implement decimals when we know we are ready. We are not there yet," NASD Chairman Frank Zarb wrote in a letter Monday to
Securities and Exchange Commission
Chairman Arthur Levitt.
"Nasdaq has been growing faster than other markets, so it is logical that we are more sensitive to capacity issues," wrote Zarb, who said NASD supports the eventual shift to decimal pricing. "We will not put investors and the market at risk by forging ahead too soon."
The SEC in January told Nasdaq, the New York Stock Exchange and options markets to begin quoting prices in decimals July 3.
"We have received the letter and have no response at this time," SEC spokesman John Heine said Tuesday afternoon.
For coverage of today's top stocks in the news, see the Company Report, published separately