Yes, it was ugly on Wall Street, especially for those long technology stocks. Moreover, stocks tumbled toward the close after a mid-afternoon bounce failed to sustain its impetus. Still, it was not the "hide the children, only a mother could love it" kinda ugly traders experienced last August and September.
All major proxies ended with losses and at or near intraday lows, while market breadth was lousy again. However, optimists noted the declines again came on below-normal trading volume. Additionally, the bond market enjoyed only a modest upward bias, suggesting institutional investors haven't abandoned equities quite yet. The price of the 30-year Treasury bond rose 13/32 to 99 1/32, its yield falling to 5.32%.
Dow Jones Industrial Average
closed down 158.08, or 1.7%, to 9133.03, just above its low of the session. The close is the lowest for the blue-chip proxy since Jan. 22 and left the index down for the year, its 1.9% January gains having been erased (and then some).
exerted the greatest negative influence on the Dow, followed by
. All but three of the Dow's 30 components ended in arrears. (The lucky winners:
Even a reportedly upbeat presentation by
Goldman Sachs Technology Conference
this morning could not prevent tech stocks (including
) from suffering a continuation of recent selling only temporarily interrupted
Monday. Internet names, meanwhile, were waylaid by terms of the
three-way merger involving
Nasdaq Composite Index
fell 94.13, or 3.9%, to 2310.79, suffering its third-biggest point decline in history. Nearly all tech bellwethers were saddled with losses and notable declines were sustained by
and Dell. The
shed 4.9% and the
Philadelphia Stock Exchange Semiconductor Index
'Down 158 on the Dow you can live with,' said IJL's Doug Myers, 'but down 98 on the
Nasdaq 100, that's the sucker punch to the solar plexus.'
sustained similar declines; the
Morgan Stanley High-Tech 35
TheStreet.com Internet Sector
index tumbled 48.59, or 9.6%, to 456.26, thanks largely to a 26.1% decline in Lycos. Shareholders were apparently frustrated the merger only offered about a 2% premium to Lycos' Monday closing price.
"There is the psychological impact of not quite getting the valuation impact people were thinking," said Roy Blumberg, chief investment strategist at
Chestnut Investment Group/First Allied Securities
. "There's a lot of psychology in these Internet stocks and it's deteriorating a little because maybe they're not worth as much as people think. When you change the psychology you change the momentum, and momentum was going the other way anyway."
TheStreet.com E-Commerce Index
shed 8.70, or 8.6%, to 93.10. Options on the E-Commerce Index begin trading on the
American Stock Exchange
Feb. 17; quotes became available Friday, under the symbol ICX. Lycos is not a component of the E-Commerce Index, but
are; each fell heavily today.
finished down 27.63, or 2.2%, to 1216.14 and is now in the red for the year. The
closed down 8.20, or 2%, to 403.13.
In its immediate aftermath, market players were unable to pin the decline on any particular factor, nor could they ascertain what drove stocks down so fiercely in the final hour of trading.
"I don't have a handle whether there was index arbitrage shenanigans or computer-driven stuff going on" toward the close, said Doug Myers, vice president of institutional trading at
in Atlanta. "There's nothing news-wise that stuck out. Nothing today that much more unsetting than yesterday, except the Nasdaq. That's the stinger. Down 158 on the Dow you can live with, but down 98 on the
Nasdaq 100, that's the sucker punch to the solar plexus."
The late-day swoon almost guarantees weakness tomorrow, at least at the opening, Myers said. "You're going to definitely have a touch of the chills; they aren't going to be gone by tomorrow," he said. "It will take a few days to work this one out of the system."
In NYSE action, a relatively sparse 715.1 million shares traded while declining stocks whipped advancers 1,997 to 982. In
Nasdaq Stock Market
activity, losers led 2,820 to 1,216 while 915.1 million shares traded on an index for which billion-share sessions have become commonplace. New 52-week lows led new highs 84 to 15 on the Big Board and by 73 to 36 in over-the-counter trading.
Remain Calm, Not All Is Terrible
The action today is part of a "topping process" begun late last year, during which there has been "distribution under the guise of a limited number of stocks moving the market averages because they have such heavy weightings," Blumberg said. "If you look at the portfolio of a value player or a growth-at-a-reasonable-price investor, you're not seeing the same reflection on the downside because that's not what moved the averages to the upside."
The trend is a precursor (or onset?) of "another intermediate correction within an ongoing bull market," the strategist said. "Bear markets come from tighter monetary policy or shocks to the system. You've still got a healthy rate environment and monetary policy, and OK corporate earnings. Any pullback here will probably be smaller than the one last fall."
Blumberg continues to recommend investors raise cash at "whatever level is enough to manage an intermediate-term correction leading to an opportunity to put money back to work."
The strategist declined to specify the length or magnitude of the correction but did predict it will "finally lead to a change in leadership" from the big-cap tech stocks. "My guess is it will be to economically sensitive stocks but it's too soon to know."
Among other indices, the
Dow Jones Transportation Average
54.11, or 1.7%, to 3155.14; the
Dow Jones Utility Average
dipped 2.34, or 0.8%, to 293.72; and the
American Stock Exchange Composite Index
fell 10.66, or 1.5%, to 692.24.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
plunged 139.80, or 2.1%, to 6443.97 and the
Mexican Stock Exchange IPC Index
tumbled 69.86, or 1.7%, to 3946.94.
Tuesday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
As noted above, USA Networks reeled in 3 5/8, or 9.6%, to an all-time high of 41 5/8 after agreeing to buy Lycos in a deal linking the Internet portal with the company's
Home Shopping Network
Internet Shopping Network/First Auction
and TicketMaster-CitySearch units. The new company, to be called
USA/Lycos Interactive Networks
, will be chaired by USA Chairman and CEO
. Lycos CEO Robert Davis will serve as president and chief executive.
Lycos, meanwhile, depressed 33 3/16, or 26.1%, to 94 1/4.
declined 17 5/8, or 11.1%, to 140 3/4;
declined 9 1/16, or 8.3%, to 100; and
declined 11 1/16, or 7%, to 147 15/16.
Mergers, acquisitions and joint ventures
slipped 1 11/16 to 86 after
chief executive, Rolf Breuer, said in an interview on German television that the bank's acquisition of the company would not make economic sense if it were delayed too long.
jumped 2 11/16, or 13.8%, to 22 1/8 after
agreed to sell its clinical laboratory operations to the company for about $1.3 billion in cash and stock. Under the deal, SmithKline Beecham will receive about $1 billion in cash and 12.6 million newly issued Quest Diagnostic shares, and will hold 29.5% of Quest. SmithKline added 15/16 to 67 1/8.
swelled 4 3/4, or 7.7%, to 66 7/16 after saying it will buy SmithKline's
Diversified Pharmaceutical Services
unit for $700 million in cash.
Sound Source International
, recently rumored as a takeover target, gave back 3/16, or 12%, to 1 3/8 even after announcing it hired
to explore strategic alternatives.
Earnings/revenue reports and previews
grew 1 9/16 to 38 5/16 after posting fourth-quarter earnings of 80 cents a share, beating the six-analyst consensus by 2 cents and moving ahead of the year-ago 62 cents.
picked up 1 7/8, or 6%, to 33 1/4 after last night posting fourth-quarter earnings of 56 cents a share, 4 cents higher than expected.
brought in 3 1/4, or 14.1%, to an all-time high of 26 1/4 after last night beating fourth-quarter earnings estimates by a dime a share with a profit of 47 cents.
shot up 7 7/8, or 22.7%, to an all-time high of 42 1/2 after last night reporting fourth-quarter earnings of 65 cents a share, blowing away the four-analyst forecast by 11 cents and coming in ahead of the year-earlier 22 cents, and announcing a 2-for-1 stock split. Today,
upped the stock to trading buy from market outperform.
climbed 1 to 23 1/16 after last night reporting fourth-quarter earnings a penny a share ahead of estimates.
sliced off 1 3/16, or 7.5%, to an annual low of 14 11/16 after late yesterday posting fourth-quarter earnings of 18 cents a share, 4 cents below the 11-analyst forecast and behind the year-ago 47 cents.
vaulted 1 3/4, or 10.1%, to 19 1/16 after last night recording fourth-quarter earnings 3 cents a share above expectations.
lifted 1 1/2, or 13%, to 13 after last night reporting fourth-quarter earnings in line with estimates of 21 cents a share. Today,
raised the stock to near-term accumulate from neutral and to long-term buy from accumulate.
In other earnings news:
Offerings and stock actions
dropped 26 1/8, or 15%, to 148 after saying 4.6 million shares held by
Science Applications International
and stockholders were sold a $170 apiece.
took in 1 3/4, or 7.1%, to 26 3/8 after
BT Alex. Brown
started coverage with a buy.
tanked 5 3/4, or 12.7%, to 39 9/16 after
cut it to long-term buy from buy.
tanked 13/16, or 7.6%, to 9 7/8 after
Warburg Dillon Read
slashed it to buy from strong buy.
surged 1 1/16, or 10.7%, to 11 after Merrill Lynch pushed up the stock to near-term accumulate from neutral while maintaining its long-term buy.
rose 1 13/16, or 5.3%, to 36 after
Morgan Stanley Dean Witter
upgraded it to outperform from neutral.
powered up 1 13/16, or 6%, to 31 13/16 after Morgan Stanley Dean Witter raised it to strong buy from outperform.
declined 2 1/16, or 5.3%, to 37 1/4 after Merrill Lynch lowered it to neutral from accumulate while keeping it at long-term buy.
lost 3 15/16, or 7%, to 52 1/2 after Morgan Stanley Dean Witter dropped it to outperform from strong buy.
Dutch semiconductor equipment maker
fell 2 1/16 to 43 7/8 after saying CEO Willem Maris will retire Jan. 1.
slid 1/4 to 50 3/4 after launching a Web site to sell some of its footwear and apparel online. On Feb. 1,
profiled the retailer and said it would unveil its e-commerce effort within 10 days.