Friday's runaway rally seemed like a distant memory this morning. While Monday was a middling day, Tuesday was bad day, and today's been a downright nasty day, as the indices tore into the red like that shark in Jaws tore into Robert Shaw.
Yesterday it was the semiconductors. Today it's the boxmakers -- and the banks, and the brokerages.
Dow Jones Industrial Average crashed below its psychological support level of 10,000 this morning at the open. And as soon as trading on box-making bellwether
was resumed, the blue-chip index plunged over 400 points. The index had lately scraped its way back up, though it was still stuck in the mire. IBM was still gobbling up over 104 points of Dow.
Last night IBM reported lower-than-expected
revenues and was ambiguous about its fourth quarter. Analysts began slamming the company this morning, including
, which knocked the company off its recommend list.
IBM was lately down 15.8% to $95.13.
Investors hadn't expected any disappointments because the company didn't preannounce, and IBM shares have risen over the past few days. Many market pros were hoping that once the "preannouncement" season ended and the actual earnings reporting season began, there would be enough positive surprises to alleviate fears that corporate earnings were really on the rocks. But the reports have been mixed, and investors are concentrating on the bad.
IBM Not the Only Culprit
The other big earnings miss of the morning came from banking bellwether
. The company partly blamed losses on the
Nasdaq Composite Index, which hurt
results at its venture capital arm. Chase was lately off 9.2% to $34.44.
Though it reported strong earnings overnight, brokerage
was suffering from Chase's misstep and helping to cripple the Dow in turn. J.P. Morgan was down 9.2% to $125, slashing 81 points from the index.
Meanwhile, IBM's trouble was spreading to pretty much all of tech -- except for the semiconductors, which appeared to be celebrating
. Intel last night posted earnings above its revised expectations. Though several other analysts came out with downgrades on the company, Intel was lately 5.9% higher to $38.38.
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Some of the only sectors getting a boost this morning were defensives like tobacco stocks, paper stock and gold stocks.
American Stock Exchange Tobacco Index
was 0.6% higher and the
Philadelphia Stock Exchange Forest & Paper Products Index
was up 1.6%.
The drugs, traditional defensive stocks which have been reporting strong earnings, might have been getting more investor love. But they weren't. Some analysts were blaming Democratic presidential candidate Al Gore, who was tough on the drug companies again last night. The
American Stock Exchange Pharmaceutical Index
was down 0.4%.
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The bond market is rallying strongly this morning as funds move into safer investments following ongoing signs of weakness in equity markets.The market was relatively unconcerned by today's
Consumer Price Index
) for September which showed a 0.5% rise in the headline number and a 0.3% increase in the core rate. Energy prices rose 3.8% in the latest month, a big turnaround from August's 2.9% drop. On an annual basis, CPI is now running at a 3.8% rate, well ahead of last year's 2.7% increase.
After the CPI data, the market rallied sharply, with the
The benchmark 10-year
Treasury note at 101, up 16/32 to yield 5.62%. The bond market is clearly much more concerned with the weak performance of the stock market and its implications for lower interest rates than it is with the growing signs of inflationary pressure in the economy.
Treasury bond was lately up 9/32 to 107 2/32, yielding 5.750%.
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