There was no doubt that the market was in for trouble today, when Nortel (NT) fell short of revenue estimates last night. Just how far investors took down technology stocks was apparent in late-day action.
Dragged down by Nortel's news, the
Nasdaq Composite Index ended deep in negative territory and weakening into the close. The
Dow Jones Industrial Average was also lower.
Shares of Nortel fell 28.9%, on the heels of its
earnings report last night. The company revised its outlook for optical sales for the year. This afternoon, the networking stock was the most actively traded issue on the
New York Stock Exchange, with a whopping 123 million shares changing hands.
Not surprisingly, research
analysts jumped on Nortel and related companies this morning.
Technology stocks that dropped in sympathy with Nortel included fellow optical-networking leader
, was down 25.3%. JDS reports its earnings tomorrow. The company's acquisition target,
, was also lower, down 25.9%.
Other stocks feeling the "Nortel effect" today were
, down 9.9%,
Applied Micro Circuits
, behind about 25.4%, and
, down 15% to $28.75.
On the Dow front, strength in defensive stocks was mixed in with weakness in technology issues.
Johnson & Johnson
-- up 2.4% -- and
-- up 1% -- added 21 points to the measure's upside. Also,
Procter & Gamble
together contributed about 18 points.
countered Dow point gains with a 34-point negative draw. H-P was down 6%.
was up 4.3%, despite warning last night that fourth-quarter earnings would fall 4 cents short of analysts' 41-cent estimate. The company blamed the
beleaguered euro for its troubles. Analysts rescued Compaq's stock today.
upgraded the stock to buy from market perform, while
Credit Suisse First Boston
reiterated its strong buy rating.
fell 13% after it announced a plan to break the company into four companies with their own common or tracking stocks.
downgraded the company to near-term accumulate from near-term buy. Merrill similarly cut long-distance carrier
. WorldCom was down 6.3%.
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Investors emptied their pockets into defensive stocks in afternoon trading. The
American Stock Exchange Pharmaceutical Index
was 2% higher, led by Johnson & Johnson and
American Home Products
, ahead 3.5%.
On a down day for technology stocks, the
TheStreet.com Internet Sector
was behind 2.6%. Shares of component
jumped 7.8%, in reaction to a narrower-than-expected loss and the company's optimism about the crucial fourth quarter. (
discussed Amazon's earnings in another
Philadelphia Stock Exchange Semiconductor Index
dropped 7.2%, as a result of Nortel and Compaq's news. Among the hardest-hit components were
, down 13.6%, and
, behind 10.9%.
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The bond market has now reversed course. The 10-year
Treasury note was at 100 15/32, off 1/32 to yield 5.686%. The 30
Treasury bond was at 107 5/32, up 2/32 to yield 5.744%.
Mortgage Applications Survey
) for the week ended Oct. 20, rose to 587.2 from 498.6 in the previous week. Refinancings continued to rise, while the purchase index slipped to 298.7 from 311.1.
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