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Market Update: Late Rally Limits Losses as Dow, Nasdaq Close Off Lows

<LI>Dow ends down by 40 points; Comp is off about 12.</LI><LI>BEA Systems dives after estimate cuts.</LI><LI>eBay drags Internet sector lower.</LI>

The major indices came off their lows to close down by just double-digits -- something that lately (and sadly) can be considered an OK trading day.

The

Dow Jones Industrial Average and the

Nasdaq Composite Index hit their lows of the day at mid-afternoon. The Dow was logging triple-digit losses then, and the Nasdaq crossed the 100-point-loss mark several times, as well.

Negative research notes and earnings warnings in the tech sector were weighed down the market, but some stocks closed higher -- just barely.

We'll start with PC maker

Dell

(DELL) - Get Dell Technologies Inc Class C Report

, which fell after

Bear Stearns

cut its 2001 and 2002 earnings-per-share estimates for the company to reflect lower sales and margins. The stock ended the day up 0.7% to $19.13.

The Internet sector was rocked by news from

New Era of Networks

(NEON) - Get Neonode Inc. Report

, which warned after the close Friday that it would have a larger-than-expected loss for its fourth quarter. The Internet infrastructure software maker cited slowing spending in information technology. It closed down 43.8% to $3.09.

TheStreet.com Internet Sector

index, aka DOT, was off 1.5%.

Applications-software maker

BEA Systems

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, which closed off by 13.4% to $46.44, was hit with a price target cut from

Prudential Securities

and an estimate cut by

Wit SoundView

because of less spending in IT.

Also, shaking up Internet stocks was online auction house

eBay

(EBAY) - Get eBay Inc. Report

, which fell after it said it would pay $120 million in cash to take a majority stake in the South Korean company

Internet Auction

. But the stock ended the day up by 0.2% to $30.63.

TheStreet Recommends

Meanwhile, blue-chip

Alcoa

(AA) - Get Alcoa Corp. Report

was a shining star on the mostly unhappy Dow, rising 1.5% to $33.63 after posting better-than-expected earnings.

Still, it wasn't the best performer on the Dow.

Philip Morris

(MO) - Get Altria Group Inc Report

took that title as worried investors moved into defensive stocks. Another defensive lately cleaning up was consumer products company

Procter & Gamble

(PG) - Get Procter & Gamble Company Report

. Together, the companies added more than 22 points to the Dow's positive column.

Sector Watch

Investors flocked to the safe haven of consumer and tobacco stocks today. The

Morgan Stanley Consumer Index

rose 1.7%, while the

American Stock Exchange Tobacco Index

rose 1.8%.

Oil and gas companies, along with utilities, may be unpopular with Californians, but not with investors. The

American Stock Exchange Natural Gas Index

was up 1.9%, while the

Philadelphia Stock Exchange Oil Service Index

was 1.2% higher. The

Dow Jones Utility Average

rose 2.2%.

Bonds/Economy

After retreating this morning

Treasury notes and bonds were mixed this afternoon. Short-term issues were up, while the benchmark 10-year note shifted on both sides of the ledger, though long-term offerings continued down. The upturn earlier could have been related to positive remarks from the chairman of the Atlanta Federal Reserve Bank earlier today, who asserted that the economy was "fundamentally sound." In addition, equities were down moderately today, and bonds usually display contrary behavior vis--vis the stock market. Yields are still hovering in the region of their two-year lows.

The benchmark 10-year

Treasury note lately was down 6/32 to 106 1/32, making its yield 4.952%.

Analysts are divided about the

Federal Reserve's stance in lowering interest rates. Those who feel the central bank admitted an error when it cut interest rates last week expect a 50 basis-point cut at its

FOMC meeting Jan. 30 and 31. Others say the Fed only confirmed a commitment to stable capital and financial markets by the rate cut. They project a 25 basis-point correction in January and possibly another in March.

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