Indices Close Down as Tech Sector Takes a Hit

Depressed sectors rose amid a selloff in tech issues.
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Tech stocks fell sharply as traders and investors dumped those stocks in favor of beaten-down sectors of the market.

The

Nasdaq Composite Index

tumbled 36.42, or 1.5%, to 2373.65, piling on to the 3.3% drop it suffered yesterday. The Nasdaq Comp, however, did manage to pare some of its losses.

Nonfarm payrolls ballooned by 245,000 in January, the

Bureau of Labor Statistics

reported, while the unemployment rate remained unchanged at 4.3%. The jobs data was much stronger than expected. The consensus forecast called for an increase of 135,000 jobs, according to

Reuters

.

Cyclicals, basic materials and energy stocks rallied. The

Morgan Stanley Cyclical Index

was up 1.7%. The

Philadelphia Stock Exchange Forest & Paper Products Index

was up 1.2%. The

American Stock Exchange Oil Index

was up 3.1%. The

Amex Natural Gas Index

was up 2.6%.

As for the major market indices, the

Dow Jones Industrial Average

slipped fractionally to end at 9304.24. The

S&P 500

surrendered 9.10, or 0.7%, to 1239.39. The small-cap

Russell 2000

slumped 5.05, or 1.2%, to 412.74.

TheStreet.com Internet Sector

gave up 5.93, or 1.1%, to 532.52.

Stocks have been weighed down over the past few sessions because of the tumbling Treasury market.

The 30-year bond was down 25/32 to 98 18/32, yielding 5.35%. The strong employment report, coupled with upcoming supply, weighed on the bond market.

On the

New York Stock Exchange

, decliners beat advancers 1,776 to 1,158 on 871 million shares. On the

Nasdaq Stock Market

losers beat winners 2,335 to 1,532 on 813 million shares.

On the NYSE, 61 issues set new 52-week lows while 24 touched new highs. On the Nasdaq, 73 issues set new highs while new lows totaled 42.

On the NYSE, newcomer

Delphi Automotive Systems

(DPH)

, a spin-off of

General Motors

(GM) - Get Report

, was most active, with 35.1 million shares changing hands. It was up 1 7/16, or 8.5%, to 18 7/16 in its trading debut. Delphi's mammoth 100 million-share IPO was priced in-range at $17 a share yesterday.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 35.5 million shares changing hands. It was down 2 to 100 7/16.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

.

2:54 p.m.: Tech Losses Keep Battering Nasdaq

Although it is still enduring a heavy beating, the

Nasdaq Composite Index

is well off its intraday lows going into the final hour of trading while oil and natural gas stocks rallied.

It was down 30 to 2380. The Nasdaq Comp bottomed out around 12:45 p.m. EST.

Dan Marciano, head of equity trading at

First Albany

, said the story in the market today was the "meltdown" in the tech sector as money fled that area and was redirected into cheap sectors of the market, particularly oil and natural gas.

The oil stocks were rallying despite weakness in oil prices. Natural gas prices were up, however. The

American Stock Exchange Oil Index

was up 3%. The

Amex Natural Gas Index

was up 2%.

Cyclicals were also enjoying nice gains. The

Morgan Stanley Cyclical Index

was up 2%.

However, oil service, gold mining and forest and paper product stocks have surrendered a good chunk of their earlier gains. The

Philadelphia Stock Exchange Oil Service Index

was up 1%; the

Philadelphia Stock Exchange Gold and Silver Index

was down fractionally%; while the

Philadelphia Stock Exchange Forest & Paper Products Index

was up 1%.

The

Dow Jones Industrial Average

was down 5 to 9229. The

S&P 500

was down 10 to 1238. The small-cap

Russell 2000

was down 4 to 414.

TheStreet.com Internet Sector

index was down 5 to 533.

The 30-year Treasury bond was down 24/32 to 98 19/32, yielding 5.34%.

On the

New York Stock Exchange

, decliners were beating advancers 1,686 to 1,163 on 694 million shares. On the

Nasdaq Stock Market

losers were beating winners 2,335 to 1,532 on 814 million shares.

On the NYSE, 53 issues had set new 52-week lows while 19 had touched new highs. On the Nasdaq, 35 issues had set new highs while new lows totaled 58.

2:07 p.m.: Nasdaq Continues to Be Hobbled by Tech Losses

The tech sector's drubbing continued this afternoon as the

Nasdaq Composite Index

tumbled 1%, while

Pacific Internet

(PCNTF)

was making an eye-popping trading debut, but is well off its best levels of the day.

The Nasdaq Comp was down 36 to 2374.

Singapore-based Pacific Internet, whose 3 million-share IPO was priced in-range at $17 a share last night by lead manager

Lehman Brothers

, was up 31 1/2, or 184%, to 48 15/16. It peaked at 88. The company provides Internet access services primarily in the Asia-Pacific region.

Meanwhile, the

S&P 500's

energy and basic materials sectors surged. The S&P overall was down 8 to 1241.

The

Dow Jones Industrial Average

was up 11 to 9316. The

Russell 2000

was down 4 to 414.

TheStreet.com Internet Sector

index was down 5 to 534.

Cyclicals rallied. The

Morgan Stanley Cyclical Index

was up 2%.

Energy stocks were soaring. The

American Stock Exchange Oil Index

was up 3%. The

Amex Natural Gas Index

was up 2%. Oil service stocks have also gained. The

Philadelphia Stock Exchange Oil Service Index

was up 1%.

Gold and forest and paper product stocks also gained. The

Philadelphia Stock Exchange Gold and Silver Index

was up 1%. The

Philadelphia Stock Exchange Forest & Paper Products Index

was up 1%.

Turning to Treasuries, the 30-year bond was down 20/32 to 98 23/32, yielding 5.34%.

On the

New York Stock Exchange

, decliners were beating advancers 1,624 to 1,196 on 597 million shares. On the

Nasdaq Stock Market

losers were beating winners 2,334 to 1,431 on 707 million shares.

On the NYSE, 50 issues had set new 52-week lows while 15 had touched new highs. On the Nasdaq, 33 issues had set new highs while new lows totaled 52.

Delphi Automotive Systems

(DPH)

, a spin-off of

General Motors

(GM) - Get Report

, made its trading debut today. It was up 1 11/16 to 18 11/16. It was also most active on the NYSE with 32 million shares changing hands. Delphi's huge 100 million-share IPO was priced in-range at $17 a share yesterday.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 25 million shares changing hands. It was down 2 1/8 to 100 5/16.

Focus: E*Trade Woes Continue

E*Trade

(EGRP)

had a partial interruption of online trading again Friday morning, according to E*Trade spokeswoman Lisa Nash. The problem apparently lasted from 12:20 to 12:50 p.m. EST and only affected a small percentage of customers, she says. She adds that over the past three days of trading problems, only about 5% of E*Trade's customers have been affected.

Customers have emailed

TheStreet.com

and complained on message boards about their inability to trade online and to see account information as well as voice their difficulty in getting through to trade on the phone. A software malfunction took down online trading for part of the day Wednesday and Thursday and forced traders to crowded phone lines. E*Trade is still investigating the cause of today's problem

E*Trade's stock was getting crushed. It was down 4 5/8, or 9%, to 48 3/4.

--

Amy Olmstead

12:54 p.m.: Midday Musings: Bloody Tech Selloff Keeps Hacking Away at Valuations

11:53 a.m.: Tech Losses Continue to Hold Nasdaq in Negative Territory

Another technology sector selloff was slicing apart the

Nasdaq Composite Index

while the blue-chip

Dow Jones Industrial Average

was near flat.

The Nasdaq Comp was down 52 to 2358. It fell 3.3% yesterday.

The Dow, however, was slightly higher, up 2 to 9307.

Alcoa

(AA) - Get Report

,

Chevron

(CHV)

and

Exxon

(XON) - Get Report

were the star performers so far in the Dow.

The

S&P 500

was down 10 to 1239. The

Russell 2000

was down 4 to 413.

TheStreet.com Internet Sector

was down 13 to 525.

In the Treasury market, the 30-year bond was down 13/32 to 98 30/32, yielding 5.32%. (For more on the fixed-income market, see today's early

Bond Focus.)

On the economic front,

nonfarm payroll

employment

grew by 245,000 in January, the

Bureau of Labor Statistics

reported.

The employment report was much stronger than expected. The consensus forecast called for an increase 135,000 jobs, according to

Reuters

. The unemployment rate was unchanged at 4.3%.

Delphi Automotive Systems

(DPH)

, a spin-off of

General Motors

(GM) - Get Report

, made its trading debut today. It was up 1 5/8 to 18 9/16. It was also most active on the

New York Stock Exchange

with 26 million shares changing hands. Delphi's huge 100 million-share IPO was priced in-range at $17 a share yesterday.

On the NYSE, decliners were beating advancers 1,527 to 1,084 on 374 million shares. On the Nasdaq losers were beating winners 2,052 to 1,317 on 442 million shares.

On the NYSE, 39 issues had set new 52-week lows while 12 had touched new highs. On the Nasdaq, 29 issues had set new highs while new lows totaled 36.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 16 million shares changing hands. It was down 5 3/8 to 97.

Tech Focus

The tech indices were getting hammered again today.

The

Philadelphia Stock Exchange Semiconductor Index

was down 5%. The sector was pounded yesterday on chatter of a price war between chip makers

Intel

(INTC) - Get Report

and

Advanced Micro Devices

(AMD) - Get Report

. Helping dampen those stocks yesterday was news that

Merrill Lynch

semiconductor analyst Thomas Kurlak cut his earnings estimates for Intel and downgraded AMD for the near term.

News for AMD got even worse late yesterday when it said it may suffer an operating loss in the first quarter. Today, AMD was down 2, or 11%, to 16 15/16.

The

Philadelphia Stock Exchange Computer Box Maker Index

was down 5%. The

Morgan Stanley High-Tech 35

was down 4%. The

Nasdaq 100

was down 3%.

In Internet land,

Lycos

(LCOS)

, after opening handsomely higher, has given up most of its early gains. It was up 1/28 to 130. According to a report on

The Industry Standard's

Web site last night,

NBC

is close to buying a stake in Lycos that will "probably" be around 35%. NBC, a unit of

General Electric

(GE) - Get Report

, would pay for the stake in cash and promotional time on NBC channels, the

Standard

said, citing sources at NBC and in the Internet industry. The deal could mean that Lycos would also merge with the

Snap!

portal created by

CNet

(CNET) - Get Report

and in which NBC holds a 60% stake.

TheStreet.com

wrote about the situation

last night. CNet was down 15 13/16 to 122 5/8.

In the Newsletters

Office Depot

(ODP) - Get Report

has had the edge in revenue and IT and an early jump in Internet commerce, notes a story on

Computerworld's

Web site. However, fast-growing

Staples

(SPLS)

is catching up.

11:01 a.m.: Nasdaq Pressures Other Indices

The major market averages were lower, led by the tech-heavy

Nasdaq Composite Index

, continuing the slide it suffered

yesterday.

Yesterday, the Nasdaq Comp fell 3.3%. Today, it was down 27 to 2383.

On the economic front,

nonfarm payroll

employment

grew by 245,000 in January, the

Bureau of Labor Statistics

reported.

The employment report was much stronger than expected. The consensus forecast called for an increase of 135,000 jobs, according to

Reuters

. The unemployment rate was unchanged at 4.3%.

Meanwhile, the

Dow Jones Industrial Average

was down 4 to 9300. The

S&P 500

was down 6 to 1243. The

Russell 2000

was down 2 to 415.

TheStreet.com Internet Sector

index was down 3 to 536.

Meanwhile,

Delphi Automotive Systems

(DPH)

, a spinoff of

General Motors

(GM) - Get Report

, made its trading debut today. Delphi's huge 100 million-share IPO was priced in-range at $17 a share yesterday. The stock was last trading up 1 5/8, or 10%, at 18 5/8.

Recently,

Del Monte Foods

(DLM)

began trading. It was priced yesterday at $15 a share. It was up 3/4 to 15 3/4.

Companies who offer online brokerage services -- and have seen their shares jump sharply this week -- are suffering huge losses.

J.B. Oxford

(JBOH)

was down 4 1/4, or 27%, to 11 5/8;

Siebert Financial

(SIEB) - Get Report

was down 4 15/16, or 11%, to 38 5/16; and

M.H. Meyerson

(MHMY)

was down 3 15/16, or 32%, to 8 3/8.

The 30-year Treasury bond was down 18/32 to 98 25/32, yielding 5.33%.

As for stocks, February could be a month with a downside bias, said Ricky Harrington, senior vice president and technical analyst at

Interstate/Johnson Lane

.

Yesterday's downturn was due in part to further weakness in the Treasury market, Harrington said.

"By the end of the month we could be lower than we are right now," Harrington said of the stock market.

The greatest damage done in stocks yesterday was in the tech sector, he pointed out.

Yesterday, Harrington said the market saw a shift to cyclical stocks. He pointed out strength in

Alcoa

(AA) - Get Report

,

Caterpillar

(CAT) - Get Report

and

International Paper

(IP) - Get Report

as signs of cyclicals which performed well yesterday. The move to cyclicals came in conjunction with a move away from the tech sector, Harrington noted.

On the

New York Stock Exchange

, decliners were beating advancers 1,456 to 1,039 on 265 million shares. On the

Nasdaq Stock Market

, losers were beating winners 1,748 to 1,338 on 318 million shares.

On the NYSE, 9 issues had set new 52-week highs while 29 had touched new lows. On the Nasdaq, 23 issues had set new highs while new lows totaled 28.

10:02 a.m.: Jobs Data Pressure Stocks

After opening up slightly, the major stock averages reversed course and fell into the red in the wake of

yesterday's selloff and news that

nonfarm payroll

employment

grew by 245,000 in January, the

Bureau of Labor Statistics

reported.

The employment report was much stronger than expected. The consensus forecast called for an increase 135,000 jobs, according to

Reuters

. The unemployment rate was unchanged at 4.3%.

The

Dow Jones Industrial Average

was down 18 to 9285. The

S&P 500

was down 5 to 1244. The

Nasdaq Composite Index

was down 15 to 2395. The

Russell 2000

was down 1 to 417.

TheStreet.com Internet Sector

was down 2 to 536.

The 30-year Treasury bond was down 15/32 to 98 28/32, yielding 5.33%.

Most Up at Open -- NYSE

National Discount Brokers (NDB) , up 2 5/8 to 31 5/8

.

Most Up at Open -- Nasdaq

Yahoo! (YHOO) , up 7 1/8 to 344 1/8

.

Most Down at Open -- NYSE

Telebras (TBH) , down 2 5/16 to 66 15/16

.

Most Down at Open -- Nasdaq

CD Radio (CDRD) , down 4 9/16 to 27 1/4

:

Lehman Brothers

cut its target price on the stock to $55 a share from $76.