It was day two, post-Greenspan, and the market tried its best to cope with another reminder of what the Fed chairman and his cohorts cannot fix. It couldn't do it. Stocks sunk today on the back of an earnings warning out of Motorola (MOT) , the chipmaker and mobile-phone producer.
The company cited a slowdown in chip demand and "delays in achieving expected cost reductions in wireless-phone production" as reasons for the earnings
warning. Already, a number of high-profile earnings warnings have shaken the Street, including those from
Banc of America
The multiple warnings highlighted the pressure the market may endure in coming months -- even if the Fed moves to a more accommodative stance, as Greenspan seemed to indicate in his Tuesday speech. A decline in the
fed funds rate from its current rate of 6.5% won't eliminate the problems of bad loans that financial companies are going to face; and it won't necessarily spark new demand from manufacturers for technology products. And the market is starting to come to terms with that.
Nasdaq tried to hit break-even earlier, but slid down before it could. The
Dow, which had been flirting with break-even, ended solidly in the red.
Motorola's news was taking a bite out of the semiconductors. The news sent the
Philadelphia Stock Exchange Semiconductor Index
down 1.8%. Motorola was off 0.4% to $17.75.
Most active on the Nasdaq was software Goliath
, which fell 6.2% to $53.19 after the stock had its 2001 earnings estimate clipped by
because of slowing PC sales.
A report released earlier today by research firm
didn't help matters after it said worldwide PC shipments would hit about 40.2 million units in the fourth quarter, representing growth of 19.6% over the same quarter last year and sequential growth of 19.8% from 2000's third quarter.
The research firm had previously forecast 20.3% over the same quarter last year. It also said it was revising downward 2001's total PC-shipment growth to 16.6% from 18.8% in 2000. The bright point in the report was that the portables market was strong and had outperformed expectations in the third quarter. IDC said it's anticipating shipments to grow close to 32% worldwide in the fourth quarter.
got slammed today, after the company said its acquisition of retailer
would dilute its fourth-quarter earnings and cause additional earnings dilution over the next few quarters.
Another member of the PC family was hit with a negative note.
was downgraded by
, which also slashed H-P's 2001 EPS estimates. H-P was off 2.3%.
There were few tech bright spots -- telecommunications-equipment maker
was one until it lost momentum. The company posted fourth-quarter earnings that exceeded analysts' expectations by 2 cents and raised its revenue expectations for its first quarter and full-year 2001. But, the stock ended up just 0.3% to $95.63.
Big Board, the world's largest toymaker,
was tanking after it announced earnings for 2000 will fall way below
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All things Internet were floundering today.
TheStreet.com Internet Sector
index lost 2.8%. Component
continued to get pummeled. Just knowing that ad sales are drying up should be enough to hurt it, but
also offered its help, saying there's a "legitimate chance" that the company will miss its fourth-quarter estimates.
Athletic wear and footwear companies are having a rough session.
was down 11.8% after announcing changes in management.
lost 3.9% and
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Treasuries were adding to their extraordinary gains of the last two sessions as stock prices fell.
The benchmark 10-year
Treasury note, which rose in price by a total of more than a point and a half on Tuesday and Wednesday, lately was up 2/32 at 103 8/32, dropping its yield to 5.313%, a new low for the year. The gains are based on expectations that the
Fed will lower interest rates in the next few months to stimulate the economy. Falling stock prices are seen as increasing the likelihood of interest-rate cuts.
In the only economic news of the day,
initial jobless claims
) fell to 352,000 from 361,000, a slight tightening of labor-market conditions, which have eased considerably by this measure since spring. The four-week average rose to 345,250, the highest in nearly a year and a half, from 344,000.
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