Market Update: Dow, Nasdaq Wilt in Last Hour of Action
The post-holiday delirium faded in the
Nasdaq Composite Index, wiping out the earlier gains the tech-laden index has seen. The
Dow Jones Industrial Average also ended way off its highs.
The markets were getting some mixed messages on the election front. Last night, though, Florida declared
George W. Bush
the winner of its electoral votes, legislation is still pending and
Al Gore
is not conceding.
Meanwhile, tech stocks were back to being the center of attention, attracting plenty of it from analysts.
Over on the
New York Stock Exchange,
Micron Technology
(MU) - Get Micron Technology Inc. Report
was off $3.75 to $37.13, after it was upgraded to strong buy from buy at
Banc of America
, but had its EPS estimates for 2001 cut by
TheStreet Recommends
ABN Amro
.
The Nasdaq felt some pressure from communications semiconductor manufacturer
Broadcom
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, which fell $19.56 to $97.56, on a downgrade from
Salomon Smith Barney
. Citing "signs of flattening orders in Broadcom's supply chain," the investment house cut its 12-month price for the company.
It was also getting beaten down by business-to-business Internet companies
Commerce One
(CMRC)
and
Ariba
(ARBA)
. The stocks were downgraded to hold from buy and had their price targets cut at
Wit SoundView
.
SG Cowen
reiterated its strong buy rating on both companies.
Commerce One, which was down $3.25 to $36, announced it was working with business-to-business e-marketplace
GTWeb Korea
, which is a conglomerate comprised of
LG Electronics
,
Hyundai
,
Kumho
and
Samyang
that will offer businesses real-time buying and selling capabilities.
Ariba's 2001 and 2001 earnings estimates were reduced by Wit SoundView. It was $11.44 lower to $67.
The
Philadelphia Stock Exchange Semiconductor Index
was recently down 6.9%. The sector was suffering after
Lehman Brothers
lowered its earnings forecasts for chipmakers
Xilinx
(XLNX) - Get Xilinx Inc. Report
and
Altera
(ALTR) - Get Altair Engineering Inc. Report
, citing slower demand in November. Lehman believes that neither of the semiconductor manufacturers will meet their 12% quarter-over-quarter growth targets for the fourth quarter. Xilinx tumbled 18.2%, while Altera fell 12.4%.
Another Comp component hit with a downgrade was
Cypress Semiconductor
(CY) - Get Cypress Semiconductor Corporation Report
, which got slashed to accumulate from strong buy at
Prudential Securities
. The firm said it believes further upward estimate revisions are unlikely and that visibility for future quarters is not as strong as it has been for last several quarters. The new price target is $42, down from $75.
Still, not everything was bad on the Nasdaq.
Alkermes
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popped $24.25 to $119.25, after it announced that it completed and analyzed results from the first clinical trial of inhaled insulin and was pleased with the results. Also,
Greater Bay Bank
(GBBK)
moved up $1.94 to $32, after it said it expects to beat analysts' estimates for its fourth quarter.
Meanwhile, the Dow was getting the most help from the world's largest retailer
Wal-Mart
(WMT) - Get Walmart Inc. Report
, which was jumping after it said that sales at stores open at least a year rose 4%-6%. The second-biggest contributor was
3M
on seemingly no news -- maybe ahead of a big rush on Scotch tape for wrapping presents.
Blue-chip company
General Electric
(GE) - Get General Electric Company Report
this morning named Jeffrey Immelt as the new president and chairman-elect of the conglomerate to succeed Jack Welch when he retires at the end of 2001. General Electric ended off 25 cents, or 0.5%, to $49.13.
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Sector Watch
TheStreet.com Internet Sector
index was down 2.1% after a bit of a bounce earlier in the session. It was draged down by
CMGI
(CMGI)
and
E*Trade
(EGRP)
.
The
S&P Retail Index
was up 5.1%.
Kohl's
(KSS) - Get Kohl's Corporation Report
,
Gap
(GPS) - Get Gap Inc. (The) Report
and
Wal-Mart
(WMT) - Get Walmart Inc. Report
were the sector's big gainers after one of the busiest shopping weekends of the year.
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Bonds/Economy
Treasuries were earlier under pressure in reaction to rising stock prices and the prospect that George W. Bush will be the country's next president, but were lately up a bit after news that Gore's team was pressing forward with litigation.
The only economic news of the day -- the
existing home sales
(
definition |
chart |
) report for October -- was weaker than expected, a positive development for the bond market because it suggests the economy is slowing. The pace of existing home sales fell to 4.96 million from 5.16 million in September. Economists polled by
Reuters
had forecast a rate of 5.14 million, on average.
The benchmark 10-year
Treasury note lately was unchanged at 100 27/32, yielding 5.635%.
The stock market has been the principal influence on the bond market lately. If stock prices are rising, then bond prices fall, and vice versa. Bond investors reason that rising stock prices indicate a strengthening economy, necessitating higher interest rates and lower bond prices.
At the same time, Treasury market participants view the prospect of a Bush presidency as likelier than an Al Gore presidency to change fiscal policy in ways that will lead to smaller budget surpluses. Surpluses are positive for the Treasury market because they lessen the government's need to issue additional notes and bonds.
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