yesterday was the day the music stopped in techland, today was the day somebody grabbed the piano player and punched him in the face.
Tech stocks were battered and Internet stocks deep-fried after an afternoon chance for redemption faltered. Blue-chips resisted the downward tug on the leadership group, but all major proxies ended with losses.
As stocks fell, the price of the 30-year Treasury bond rose 19/32 to 101 26/32, its yield falling to 5.13%.
Nasdaq Composite Index
tumbled from its record heights, falling as low as 2335.75 before closing off 70.72, or 2.9%, to 2344.77. That's the Nasdaq's sixth-largest point loss ever, although it's historically insignificant in percentage terms.
Most tech bellwethers were able to bounce from intraday lows, but the
still lost 3.5% and the
Philadelphia Stock Exchange Semiconductor Index
Big losses were sustained by tech leaders such as
, which closed down 6.6% to 98 5/8 after falling as low as 96 7/16. Elsewhere,
each lost over 4.5%, while
New York Stock Exchange
dipped 7.7% despite posting better-than-expected first-quarter earnings.
was able to avoid the downturn, rising 1.3% following some positive comments at
ahead of its earnings report. After the bell, Big Blue reported fourth-quarter profits of $2.47 a share; the 21-analyst estimate called for earnings of $2.45.
'The Nasdaq Comp is above its 200-day moving average by 28% to 30% -- that's the second-highest level ever,' said Everen's Greg Nie. 'The meat of that is big-cap tech stocks, and maybe they are stretched out.'
Losses for Internet names were more extreme than their traditional counterparts, as had been their recent gains.
TheStreet.com Internet Sector
index shed 26.06, or 5.1%, to 482.64 as
lost 11%, and
A host of other Net names were similarly slammed, from
, which fell 22% after posting widening fourth-quarter losses
Bearish comments from heavyweights
, strategist at
Morgan Stanley Dean Witter
, chief technical analyst at
, only added to the already growing negativity surrounding the once impenetrable Internet stock bubble, traders said.
"The Internet stocks have possibly cracked enough where it will take time to repair the damage," said Bruce Bittles, market strategist at
in Nashville, Tenn. "As for the rest -- the
and Lucents -- it's only the first day down. They had such a tremendous run you can't draw any conclusions there."
Tech bellwethers took some lumps today because "on Wednesday you had the best news you're probably going to have in a long, long time in earnings and the president saying he wants to put money in the stock market to save Social Security," Bittles surmised. "It doesn't get any better than that. So everybody did their buying early yesterday. The reaction today is pretty typical."
Dow Can't Hold Its Strength
In blue-chips, the
Dow Jones Industrial Average
spent most of the morning flip-flopping around break-even after reaching an initial high of 9377.50. Losses accelerated in the afternoon, taking the index to 9228.55 at its nadir. The Dow climbed within spitting distance of neutrality in the final hour, only to retreat and close down 71.83, or 0.8%, to 9264.08.
fell 21.46, or 1.7%, to 1235.16 while the
slid 6.57, or 1.5%, to 424.05.
proved the biggest drag on the Dow. Ma Bell was seconded by
, which declined along with the majority of financial stocks as concerns about Brazil reemerged.
Philadelphia Stock Exchange/KBW Bank Index
dipped 1.4% while brokerages were harder hit after
Donaldson Lufkin & Jenrette
posted a 32% decline in fourth-quarter profits. The
Philadelphia Stock Exchange Broker/Dealer Index
In Brazil, the
lost 4.6% despite passage yesterday of a pension reform bill considered key to the national's fiscal austerity plan. Traders were apparently more focused on the continued weakness in the real. In New York,
Bittles questioned how great an effect the developments in Brazil are having on the broader trend. "It's a two-edged sword," he said. "It could cause trouble if there's a series of devaluations in South America, but it's keeping the
in a friendly mode.
can't raise rates even with unemployment falling like a stone."
The strategist remains bullish, but foresees the market sticking in a trading range until mid-February with 9000 being "the risk" and 9700 the "reward."
Some Reasons for Optimism Amid the Slide
Similarly, Greg Nie, chief technical analyst at
in Chicago, was not overly concerned about the market's performance.
"The Internet stocks have taken a good old fashioned thumping to the downside but to the market's credit that has not dragged down the entire market," Nie observed. "It's not had the influence I would have expected it to have or could have had. That speaks well for the intermediate bullish trend."
The relatively modest NYSE trading volume today also provides bulls some solace, Nie said.
"The volume issue is helping portray weakness as a short-term consideration," he said. "We might have to go through some churning, choppy consolidation for a handful of days, but so far the bigger volume days have been on the upside. That's a plus."
In NYSE trading, 871.8 million shares were exchanged while declining stocks whipped advancers 1,932 to 1,128. In
Nasdaq Stock Market
action 1.089 billion shares traded -- the 11th straight session with more than a billion shares -- while losers led 2,477 to 1,599. New 52-week highs bested new lows 52 to 51 on the Big Board and by 65 to 34 in over-the-counter trading.
Nie did express some caution about technology as a whole, however. "I think you should keep an eye out that maybe you get a crescendo in tech," the technician said. "You have to consider there are threats now. The Nasdaq Comp is above its 200-day moving average by 28% to 30% -- that's the second-highest level ever. The meat of that is big-cap tech stocks, and maybe they are stretched out."
Among other indices, the
Dow Jones Transportation Average
fell 16.61, or 0.5%, to 3094.81; the
Dow Jones Utility Average
rose 2.48, or 0.8%, to 306.99; and the
American Stock Exchange Composite Index
fell 7.38, or 1%, to 704.99.
Elsewhere in North American equities, the
Toronto Stock Exchange 300
fell 76.58, or 1.1%, to 6635.76 and the
Mexican Stock Exchange IPC Index
lost 41.21, or 1.1%, to 3734.20.
Thursday'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.
Lucent, the world's largest maker of telecommunications equipment, tumbled 8 9/16, or 7.4%, to 106 15/16 on news its first-quarter revenue growth fell about $800 million short of expectations due to a delay in finalizing some contracts. Lucent reported quarter earnings of $1.05 a share, 4 cents ahead of the 27-analyst outlook and above the year-ago 86 cents.
, which last week agreed to be acquired by Lucent, lost 8 3/16, or 9.1%, to 81 3/4.
As noted above, IBM took in 2 1/2 to 197 after Merrill Lynch increased its 12-month price target for Big Blue to 240 from 220 a share.
Mergers, acquisitions and joint ventures
America West Holdings
shot up 3 9/16, or 18.3%, to 23 1/16 after
, parent of
, said last night it has expressed interest in buying the company. After reporting fourth-quarter earnings of $1.52 a share -- ahead of the 11-analyst outlook for $1.45 and the year-ago 12 cents -- UAL, fell 1 3/16 to 60.
broke the story
Out of synch with its sector peers, Internet search-engine company
soared 11 15/16, or 11.4%, to 117 after one of the company's execs told the
it's seeking a media or telecommunications company to become a strategic partner by taking up to a 20% stake. Eric Gerritsen, Lycos vice president for international business development, told the newspaper that Lycos wasn't pondering selling all of its business, as Excite plans to.
Earnings/revenue reports and previews
shrank 4, or 30.9%, to an annual low of 9 after last night reporting fourth-quarter earnings of 16 cents a share, 4 cents better than the 10-analyst view but down from the year-ago 25 cents. The company warned that it expects trouble in its North American region to cause an operating loss in the first quarter, and possibly in the second and third quarters as well. The current first-quarter estimate calls for earnings of 16 cents vs. the year-earlier 26 cents, and analysts had also expected profits in the second and third quarters. Today,
cut the stock to neutral.
@Home gave up 10 7/8, or 10.1%, to 97 3/8 after last night posting a fourth-quarter loss of 6 cents per share, in line with the 13-analyst consensus and a nickel better than year-ago results. The company said its revenue rose to $19.2 million in the quarter from $3.7 million while its subscriber base grew 58% in the December quarter. @Home plans to acquire the aforementioned Excite.
sliced off 1 1/8, or 8.7%, to 11 3/4 after last night posting third-quarter earnings of 4 cents a share, in line with expectations.
lowered 19 1/8, or 16.5%, to 97 3/4 after last night posting fiscal first-quarter earnings of 4 cents a share, 4 cents ahead of the two-analyst view and reversing a year-ago loss of 4 cents. The company also set a 2-for-1 stock split. CEO Russell Horowitz said he is comfortable the company can meet the full-year estimates of 24 cents a share for 1999 and 81 cents a share for 2000.
brought in 3 1/4, or 18.3%, to an annual high of 21 1/8 after last night beating fourth-quarter earnings estimates by 3 cents a share.
tumbled 6, or 9.2%, to 59 1/2 despite late yesterday reporting fourth-quarter earnings of 24 cents a share, 2 cents above expectations.
shaved off 1 1/2, or 14.2%, to 9 1/16 after last night reporting second-quarter earnings of 29 cents a share, on target with expectations. Today,
Hambrecht & Quist
cut the stock to hold from buy, saying, "We are disappointed by the company's inability to both select successful games for development and bring them to market in a timely manner."
sloughed off 3 15/16, or 13.9%, to 24 3/8 even after last night posting third-quarter earnings of 29 cents a share, a nickel ahead of estimates.
vaulted up 4 7/8, or 25.7%, to 24 3/8 after last night posting second-quarter earnings 4 cents ahead of expectations.
hopped 2 11/16, or 17.9%, to an annual high of 17 11/16 after last night reporting a second-quarter loss of 14 cents a share, 5 cents narrower than expected. Today, Merrill Lynch upgraded the stock to accumulate from neutral.
lifted 1 1/4 to 54 11/16 after last night announcing first-quarter earnings of 56 cents a share, matching analysts' estimates.
skidded 11 3/16, or 22%, to 39 13/16 after last night reporting a fourth-quarter loss of 29 cents a share, 3 cents narrower than expected.
In other earnings news:
shed 7 13/16, or 11.3%, to 61 1/8 after
Morgan Stanley Dean Witter
lowered the stock to outperform from strong buy.
rose 1 9/16 to 36 13/16 after Merrill Lynch upped it to buy from accumulate.
plunged 7 5/8, or 16.1%, to 40 after
lowered the stock to buy from strong buy.
sloughed off 5 1/4, or 9.4%, to 50 7/8 after
cut it to attractive from buy even after the company beat fourth-quarter estimates by 2 cents a share late yesterday.
decreased 4 1/8, or 6.7%, to 58 after
slashed the stock to long-term attractive from buy.
skidded 4 3/8, or 26.9%, to 12 after
downgraded the stock to buy from strong buy, saying the company has signaled its fourth-quarter and full-year earnings will be well below expectations. The firm cut its price target for the company to 22 from 25.