The sun shone today on Wall Street, but it didn't cheer up the market very much.
Instead, a storm in the form of
unexpected crummy news last night moved in, showering the market with enough bad mojo to weigh down the tech-laden
The networking giant was wreaking havoc on plenty of stocks, especially its competitors and customers.
Networking stocks, including
, were flattened on the news.
Also in the line of fire were such customers as
Last week, Cisco CEO John Chambers had said that his company had a more
difficult last quarter than expected. Yesterday, investors weren't paying attention, instead they sent the stock up ahead of the announcement, banking banked on the pattern the company had developed in the last couple years in which they beat estimates by a penny.
The news from Cisco wasn't kept to one area of technology, though. Computer chipmakers and data storage companies (on the
Big Board and the Comp) were getting pulled down right along with Cisco and its cronies. Data storage giant
, 6.6% lower to $65.39, was lately one of the most actively traded stocks on the NYSE.
were kicked to the downside. Broadcom was down 10.6% to $82.69 while PMC-Sierra lost 11.7% to $58.75.
There wasn't much good news on the Nasdaq, but one bright spot was
. The managed care company beat estimates and was handsomely rewarded with a bounce. It was up 35.4% to $33.50.
Dow Jones Industrial Average has had a volatile day, spent mainly on the upside, until finally succumbing to the red a little before 1 p.m. It ended well off its session lows and crawled closer to the flatline by the end of the day.
The pressure point was
, but not because of the typical problems of the auto industry. No, instead, it was getting socked by a report that its spinoff
was close to a deal in which it would be acquired by Rupert Murdoch's
News Corp. wants Hughes for DirecTV, the largest satellite television provider in the U.S. Reports put the value of Hughes at $45 billion, but investors weren't happy with the news. Hughes was down 10.7% to $24.75. GM was off 3.4% to $56.15 and News Corp. was 3.4% higher to $38.77.
The Dow had some support earlier from diversified manufacturer
, but couldn't fight the 16 blue-chips that were pulling to the downside.
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Tech was just not the place to be today. The
Philadelphia Stock Exchange Computer Box Maker Sector
index was down 0.5%, the
Philadelphia Stock Exchange Semiconductor Index
was off 4% and the
Morgan Stanley High-Technology 35 Index
was down 3.7%.
TheStreet.com Internet Sector Index
, aka the DOT, was down 3.3%. If you live in a cave, you might not have heard about how the dot-com rage has gone bust and nearly everyday another one bites the dust. That doesn't mean there aren't some still working their way to profitability or at least trying to.
is the grandfather of the group and its latest news is that it's going to start charging publishers as much as $10,000 a book title to get a recommendation from the e-tailer. Earlier this week,
urged investors to continue to avoid the online retailer's convertible bonds, saying that without additional infusions, the company's working capital could fall below zero. The stock was down 5.1% to $15.
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Treasury prices are up slightly from their closing levels yesterday. Bonds are seeing some "safe haven" buying right now, as equities fall in the aftermath of an unfavorable earnings announcement from technology bellwether Cisco.
Traders are also awaiting an $11 billion auction of 10-year notes this afternoon before they make bigger moves. Economic data released this morning may not do the money market any favors as private real estate activity remains strong and last quarter's productivity was surprisingly high.
The benchmark 10-year
Treasury note lately was down 4/32 to 104 2/32, yielding 5.201%.
In economic news, the
Mortgage Applications Survey
) showed that home purchasing and refinancing activities increased after having dropped during the previous week. The
rose to 311.5 from 298.1 in the week ended Feb. 2, while the
rose to 2612.5 from 1992.1. Both indices are calculated from their base values of 100 beginning in 1990.
Low mortgage rates are the reason home-seekers are so active and homeowners are readjusting the financing on their properties. But this robustness in real estate has broader implications as well. Analysts have noted that a recession cannot be possible as long as mortgage activity retains its current good health. Past data have shown that cash freed up by more favorable mortgage terms is often channeled toward consumer purchases.
The report on
productivity and unit labor costs
) indicated that productivity of nonfarm workers in the U.S. grew at a rate of 2.4% in the fourth quarter of 2000, down from 3% in the third quarter. Economists polled by
had forecast a rate of 2%. Annual productivity grew at 4.3%, its best showing since a 4.5% spurt in 1983. Unit labor costs, meanwhile, were up sharply in the fourth quarter: They rose by 4.1% -- almost a percentage point higher than the forecast growth of 3.3%.
Higher productivity, which is measured by hourly output, enables companies to turn out more goods at lower cost and suppresses inflation. However, market watchers will be hoping that the unexpectedly high labor costs were due to seasonal factors like shortage of available labor over the holidays, since this measure is directly proportional to inflation.
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