Easy come, easy go. As investors mark the anniversary of
Nasdaq 5000 with knots in their stomachs and holes in their pockets,
a profit warning from
has brought the major stock market indices to their knees.
Yesterday evening, Intel announced that first-quarter revenue would fall about 25% below fourth-quarter levels. The semiconductor manufacturer also said that it would eliminate 5,000 jobs. In recent trading, the chipmaker was trading down 10.4% to $29.81, while the
Philadelphia Stock Exchange Semiconductor Index
, which tracks the chip industry, was lower 5.6%.
In its statement, the chipmaker cited familiar culprits for its shortfall: slowdowns in PC demand and the broader U.S. economy. Intel Chairman Andy Grove had given Wall Street a heads-up prior to last night's announcement, confessing on Tuesday evening that he didn't see demand for semiconductors snapping back quickly. Among the investment firms to
cut their earnings-per-share estimates for Intel this morning were
Credit Suisse First Boston
To be sure, Intel was not the only technology bellwether in hot water this morning. Citing a source close to
reported this morning that the networking equipment manufacturer planned to
cut 5% of its workforce. At last look, Cisco had shed 9%.
Elsewhere, speculation that
follow Intel with a warning, dragged its stock down 3.6% to $57.13 in recent action. Further hurting Microsoft's stock were trimmed estimates from analysts, who worry about the
ripple effect of Intel's warning on PC makers and other chip stocks. Back in January, Microsoft memorably issued a profit warning for the first time in a decade, pointing to a falloff in demand for computers.
Also warning last night,
RF Micro Devices
said that its fiscal fourth-quarter earnings and revenue would fall below previous forecasts, due to weakness in the wireless market and an inventory buildup. Shares of the radio frequency products manufacturer were lately off 9.4% to $12.13.
Diminishing the chances of more aggressive interest rate policy from the
Federal Reserve was a stronger-than-expected
employment report.. The New nonfarm payrolls for the month totaled 135,000,
almost double the 68,000 economists had been forecasting. Unemployment stayed put at 4.2% -- economists had expected it to tick up to 4.3%. Economists still expect the central bank to ease rates by 50 basis points at its upcoming meeting on March 20.
Dow Jones Industrial Average, which had rallied into this morning's open for five sessions straight, was dragged lower by its technology components. Leading losers were Intel, Microsoft and
, off 4.5% to $101.69, and Microsoft.
While virtually every sector of the market was ailing, one group that maintained a healthy glow were drug stocks. Lately, the
American Stock Exchange Pharmaceutical Index
was rising 0.9%, with components
ahead 1.1% to $75.60 and
up 1.2% to $42.51.