Some ugly earnings from computer-maker
this morning stung the market in a tender and sensitive place and slapped the
Nasdaq Composite Index below the key 3000 level shortly after the bell. The Nasdaq hasn't traded below 3000 since October of last year, when it began its heady ascent towards 5000.
Wall Street is pretty sensitive about earnings these days, as a slowdown in the economy, and a resulting drop in capital spending on computers and telecom begin to take their toll. And it's a particularly bad time for PC-makers. In the past month, several computer leaders have cut their earnings outlook for upcoming quarters, and the whole sector has been punished for it. The latest of the bunch was
, which Friday helped to knock the Nasdaq down 171.4, or 5.3% to 3028.9. The Dow also fell on its face Friday, losing 231.3, or 2.13%, to 10,602.95.
recently wrote about the outlook for
capital expenditures. We also looked at how an economic slowdown will impact a slowdown in
But much of this bad news may already have been accounted for in the sector's stocks. After hitting a new low at 2902, the Nasdaq might try to rebound.
Still, the PC-makers weren't getting much relief. H-P's shares were off 13.3%. Apple was off 2.6%, Compaq was 4.8% lower and
was 4.5% lower. Dell was the healthiest of the group, falling only 1.1% after its Friday crash.
Dow component, the blue-chip tech stock was also driving some hemorrhaging on that index. In fact, H-P was lately striking about 32 points from the Dow. Merger partners
were also doing their part to trip up the Dow after Honeywell said it had suspended plans to sell four units due to its merger with
Together, the two diversified industrials were tearing some 26 points from the index.
H-P, which wasn't scheduled to report until Wednesday, missed fourth-quarter earnings estimates by a full 10 cents, with 41 cents per share. Only a month ago, the company said it expected to meet earnings and revenue forecasts for the quarter. The PC-maker blamed "margin pressures, adverse currency effects, higher-than-expected expenses, and business mix" for the current quarter's earnings miss, but said demand remained strong.
wrote a more detailed story about the
In other H-P news, the company also said today that it ended its quest for the consulting arm of
was taking a hit after
Credit Suisse First Boston
lowered its price target on the stock this morning. CSFB analyst John Pitzer cut its forecasts for the company's 2001 earnings per share to $2.85 from $3.25 this morning. CSFB said it might have a more bearish view of the current inventory correction than most, however. Applied Materials was falling 2.4%.
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Investors didn't like much of anything today. Defensives such as the drug, tobacco and utility stocks were all weaker, with the
American Stock Exchange Pharmaceutical Index
falling 2.7%, the
American Stock Exchange Tobacco Index
was falling 2.4% and
Dow Jones Utility Average
A couple of big food stocks, also considered defensives, were faring better, however.
was up 1.1% and
was climbing 2.1%.
Most semiconductor stocks were bouncing higher this morning, however, despite a lowered earnings view from CSFB on Applied Materials. The sector has been trending lower since early September.
was up 1.4%,
was rising 2.6% and
was lifting 2.2%.
was an exception, slipping 0.2%.
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Maintaining their positive tone of last week, bonds have opened firmer today. The fixed income market is benefiting from a run of softer economic data, sell-offs in the equities market and the stalemate in Florida.
The benchmark 10-year
Treasury note was lately at 99 28/32, up 7/32, to yield 5.768%.
Treasury bond was at 105 25/32, up 15/32, to yield 5.837.
The 30-year bond underperformed the 10-year on Friday and seemed to be catching up today.
No market-moving economic data are due today.
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