Market Update: Fears of Slowdown Push Dow, Nasdaq Solidly Into Red at Close

<LI>Only five stocks on Dow positive.</LI><LI>Juniper inflicting great pain on the Comp.</LI><LI>Telecom stocks SBC, AT&T pockets of strength.</LI>
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An indication from Federal Reserve Chairman Alan Greenspan that the central bank would likely lower interest rates swept investors off their feet yesterday. But clear signs that corporate profits are slowing brought them swiftly back to the ground today.

Most recently,

Bank of America

(BAC) - Get Report

warned that fourth-quarter earnings would fall below analysts' expectations because of higher credit costs and slowing capital markets.

The company, which runs the largest bank in the U.S., said it expects fourth-quarter earnings of about $1.4 billion, or 85 cents to 90 cents a share, compared with earnings of $1.23 a share in the same period last year. The current

First Call/Thomson Financial

calls for fourth quarter earnings of $1.17 a share. Bank of America traded down 7.7% to $38.

Last night,

Apple

(AAPL) - Get Report

issued a

warning. The company said it expects to

miss its fiscal first-quarter sales and earnings targets. As is usually the case, analysts came out the day after to trim their recommendations on the stock.

Bear Stearns

,

Lehman Brothers

and

Credit Suisse First Boston

all got in on the action today. Today, Apple was down 15.8% to $14.31.

And if Apple's bad news wasn't enough to hurt PC-makers

Gateway

(GTW)

and

Compaq

(CPQ)

, a negative note from CSFB surely did the trick. Shares of Gateway dropped 10.4% to $16.82, while Compaq fell 17.6% to $20.10.

Also this morning, chipmaking giant

Intel

(INTC) - Get Report

had a crummy note issued last week from

Salomon Smith Barney

reiterated today. The note from Jonathan Joseph said, "All our inputs suggest Intel's Q4 is shaping up to be its worst quarter in over a decade." Last week, Solly reduced Intel's EPS and revenue estimates. The stock dropped 11.6% to $31.81.

Juniper Networks

(JNPR) - Get Report

was inflicting great pain upon the Comp. The stock sunk 10.1% to $140.31. Today, its partner in a mobile Internet-network joint venture, Finnish mobile-phone maker

Ericsson

(ERICY)

, said it has sold 10.4 million shares of the Juniper stock it bought before Juniper's IPO in June 1999.

On the Dow front, the blue-chip index gave back a good chunk of the gains it made in yesterday's session.

IBM

(IBM) - Get Report

was the leading loser on the Dow, followed by Intel. Nearly every component of the blue-chip index was trading deep in negative territory. Pockets of strength included telecom stocks

SBC Communications

(SBC)

, up 1.5%, and

AT&T

(T) - Get Report

, ahead 1.5%.

Elsewhere on the

Big Board,

Home Depot

(HD) - Get Report

was up 3.3% on news that it was picking up former

General Electric

(GE) - Get Report

executive Robert Nardelli as its new CEO.

Sector Watch

Oil-related stocks fell again today as oil prices continue to tumble, hitting prices not seen since early August. The

American Stock Exchange Oil & Gas Index

was 1.6% lower, while the

Philadelphia Stock Exchange Oil Service Index

was off 1.3%. Blue-chip

ExxonMobil

(XOM) - Get Report

, the country's largest oil company, was down 2.4%.

TheStreet.com Internet Sector

fell 5.9% on the heels of yesterday's advance and amid today's technology selloff.

eBay

(EBAY) - Get Report

dropped 8.1% and

Yahoo!

(YHOO)

shed 14.5%. Today, Yahoo! announced that it was looking for a new person to head up sales to help push up its sagging ad revenue.

The

Philadelphia Stock Exchange Semiconductor Index

decreased 4.5% to 580.1. In recent action, shares of

Xilinx

(XLNX) - Get Report

-- which issued a profit warning on Monday -- fell 8.2% to $40.

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Bonds/Economy

Treasuries were getting a lift from the downturn in stock prices. The rally pushed yields down to new lows for the year.

The benchmark 10-year

Treasury note lately was up 25/32 at 103 6/32, dropping its yield to 5.324%.

Falling stock prices increase the appeal of bonds as an alternative investment. They also indicate waning confidence in the economy, calling for lower interest rates and higher bond prices.

Yesterday, Treasuries staged a huge rally in response to remarks by

Fed Chairman

Alan Greenspan, in which he acknowledged that the economy is at risk of slowing too much. Presumably, the Fed will lower interest rates in the next several months to keep that from happening.

Today's economic data, while not market-moving, was marginally negative for Treasuries. Mortgage activity increased, according to the

Mortgage Applications Survey

(

definition |

chart |

source

), forecasting increased consumer activity generally. And third-quarter

productivity and unit labor costs

(

definition |

chart |

source

) were revised lower and higher, respectively.

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