Market Update: Nasdaq Crashes Through 3000 on H-P News, Dow Hurtles Lower, Too

<LI>PC-makers getting another whipping.</LI><LI>Honeywell, GE weighing on Dow.</LI><LI>Semis rise despite CSFB call on Applied Materials.</LI>
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Some ugly earnings from computer-maker

Hewlett-Packard

(HWP)

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

Dell

(DELL) - Get Report

, 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.

TheStreet.com

recently wrote about the outlook for

capital expenditures. We also looked at how an economic slowdown will impact a slowdown in

corporate earnings.

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

Gateway

(GTW)

was 4.5% lower. Dell was the healthiest of the group, falling only 1.1% after its Friday crash.

A

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

Honeywell

(HON) - Get Report

and

General Electric

(GE) - Get Report

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

General Electric

(GE) - Get Report

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.

TheStreet.com

wrote a more detailed story about the

earnings announcement.

In other H-P news, the company also said today that it ended its quest for the consulting arm of

PricewaterhouseCoopers

.

Meanwhile,

Applied Materials

(AMAT) - Get Report

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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Sector Watch

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

retreating 0.3%.

A couple of big food stocks, also considered defensives, were faring better, however.

Conagra

(CAG) - Get Report

was up 1.1% and

Unilever

(UN) - Get Report

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.

Altera

(ALTR) - Get Report

was up 1.4%,

KLA-Tencor

(KLAC) - Get Report

was rising 2.6% and

National Semiconductor

(NSM)

was lifting 2.2%.

Intel

was an exception, slipping 0.2%.

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Bonds/Economy

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%.

The 30-year

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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