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Sir Isaac Newton taught us the following: What goes up must come down.

When it comes to the

Nasdaq, the question on everybody's mind is

how far

down. At the end of the day, the tech index was off about 29 to 2706, while the

Dow Jones Industrial Average posted a pretty nice day for itself.

This morning, news that the economy is slowing hit the Street. The third-quarter preliminary

gross domestic product data showed the estimated GDP growth rate at 2.4%, the slowest since the third quarter of 1996, but above the expected 2.2%. The

Commerce Department's

initial estimate, on Oct. 27, of third-quarter GDP growth was 2.7%.

Today's report encouraged Old Economy investors, who picked up shares of retail, drug, and financial stocks. But it did little to convince tech buyers, who got rid of chip and PC stocks this afternoon.

According to a report released this morning by

Merrill Lynch

analyst Don Kapetanakis, the short-term outlook for the Nasdaq does not look good. "We are beginning to see an increase in breadth on the downside. While we see the short-term as negative, the intermediate term appears oversold."

Over the past few weeks, analysts have debated the bottoming process. Kapetanakis believes that a bottom is starting to form. "We have seen a downside thrust, which started to maximize in mid-October and since then, it has dissipated, despite the fact that the indices have moved lower."

Still, investors wonder how low the tech-laden Nasdaq will go. "For the Nasdaq, after moving through support level of 3000, and secondary support level of 2800, we see the next viable support level of 2600," the Merrill report said.

TheStreet Recommends

The investment house cited large-cap tech stocks


(INTC) - Get Intel Corporation Report

, up 1.7% to $42.75;


(MSFT) - Get Microsoft Corporation Report

, off 2.9% to $65.13; and

Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report

, lower by 3.6% to $39.13, as the most stable. The analysts believe those tech stocks are carving out a bottom.

In a separate report today, Merrill Lynch addressed concerns that have flagged the semiconductor stocks with cautious optimism this week. Merrill analyst Joe Osha wrote: "The argument for a sustained downturn in the semiconductor business remains questionable. We think shorter-term catalysts are absent, but longer-term investors should continue to be comfortable owning high-quality communications names in our sector."

In the wake of communications chipmaker



tumble this week,

Morgan Stanley Dean Witter

upgraded the stock to a strong buy from outperform. In recent action, Broadcom bounced back 11.7%.

Still, the

Philadelphia Stock Exchange Semiconductor Index

was off slightly.


Philadelphia Stock Exchange Computer Box Maker Index

, which tracks PC-makers, was also down, lower by 0.4%. This morning, Merrill Lynch lowered sales estimates for component



, which fell 4.8%.

Anchoring the Dow in late-day trading were


(WMT) - Get Walmart Inc. Report

, up 5.9% to $51.88,



, ahead 2.4% to $94.88, and

American Express

(AXP) - Get American Express Company Report

, higher by 3.3% to $56.94. The Dow got the most negative pull -- 25 points -- from


(XOM) - Get Exxon Mobil Corporation Report

, which was downgraded this morning by

ABN Amro


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Sector Watch


Nasdaq Biotechnology Index

, which dropped 5.7% yesterday ended down another 0.4%. Some market observers say the biotechs are ready for a bounce, though.

ING Barings

this morning initiated coverage of six therapeutic biotechnology companies with buy or strong buy ratings.

Oil-related stocks were suffering today. The

American Stock Exchange Natural Gas Index

was down 5% and the

American Stock Exchange Oil & Gas Index

was 3.2% lower. Crude oil prices lately were down from yesterday's close. The price of oil has been under pressure a bit lately after climbing in the past few months.

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Treasuries were higher following the downward revision to third-quarter economic growth, even though the revised growth rate was higher than expected. The downturn in stock prices was helping boost them, though, as was the completion of the Treasury Department's monthly two-year note auction.

The benchmark 10-year

Treasury note lately was up 1/32 at 101 15/32, lowering its yield to 5.553%.

The government revised its estimate of third-quarter

gross domestic product growth down to 2.4% from 2.7%. That is the slowest rate since the third quarter of 1996, but not as slow as economists were expecting. Economists polled by


forecast a revision to 2.2%, on average.

The slide in stock prices helps send money into bonds by suggesting that the economy will slow further.

The completion of the two-year note auction ends dealer unwillingness to buy Treasuries so as not to drive prices higher ahead of a bidding deadline.

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