Market Update: Stocks' Bloodletting Continues at Midday
The major indices were looking about as pretty as the sludge that's all over Wall Street this morning.
With the
Nasdaq hitting levels it hasn't seen since January 1999 -- it was lately down 51 to 2193 -- the
S&P 500 very nearly in a bear market for the first time in 10 years -- it was down 22 to 1231 -- and the
Dow down 2.4% on the year -- it was lately off 143 to 10, 383 -- one has to latch onto pockets of optimism.
Trying to find a bright side to today's grim picture, one might note that these three indices lately were off their session lows and there are still hours to go before the closing bell. After all, yesterday, in the hour before the close, the Dow rallied back from a triple-digit loss to a slightly positive finish.
Still, a comeback isn't going to be easy, with all of the negative news that emerged last night and this morning.
One of the most noxious pieces of news came from networking computing giant
Sun Microsystems
(SUNW)
, which in a conference call
sharply lowered fiscal third-quarter earnings and revenue guidance after the close of regular trading yesterday. Sun was the most actively traded stock on the Nasdaq, falling 2.7% to $20.25.
Of course, Sun's news was really no shock. The company's shares have plunged over the last week as
investors worried that Sun would make just such an announcement on its regularly scheduled quarterly call. But analysts were
backpedaling on the stock this morning.
Goldman Sachs
TheStreet Recommends
, which has the stock on its recommended list,
Credit Suisse First Boston
, which rates it a buy and
Lehman Brothers
, which rates it a strong buy, have done the usual, cutting estimates to reflect company guidance. They all maintained their existing ratings.
Big-cap techs were suffering again, including
Cisco
(CSCO)
,
Oracle
(ORCL)
and
Intel
(INTC)
.
The already severely beaten-down telco sector received another harsh blow with mobile-phone maker
Motorola
(MOT)
warning this morning that it will miss already lowered first-quarter earnings estimates and might even post a loss. Motorola was off 4.5% to $16.51, and was one of the top three most-actively traded stocks on the
New York Stock Exchange.
In yesterday's action, rival
Nokia
(NOK)
took a dive on worries about a profit warning, pulling down
Ericsson
undefined
with it, and killing European markets. Today, Motorola took its place as the big telco domino, knocking them way down again. Nokia, which along with
Alcatel
undefined
was downgraded by
Goldman Sachs
, was 9.8% lower to $20.92 and Ericsson was off 2.3% to $7.94.
Specialty chipmakers
Altera
(ALTR)
and
Xilinx
(XLNX)
were falling after being
downgraded by Lehman Brothers. Altera was sliding 4.8% to $24.81, and Xilinx was down 7% to $39.88. The
Philadelphia Stock Exchange Semiconductor Index
was down 4.8%.
Many fiber-optics names were getting hit after
Morgan Stanley Dean Witter
cut its price target on sector darling
JDS Uniphase
(JDSU)
to $50 from $95. JDS was falling 3.4% to $29.44;
Nortel
(NT)
, which warned of slowing in coming quarters late last week, was dropping 3.9% to $19.17.
The
blue-chip
Dow was getting hit hardest by bellwether
IBM
(IBM)
, after
Salomon Smith Barney
cut the company's price target, to $135 from $140, and shaved its third-quarter sales and profit targets. IBM was cutting 48 weighted points from the Dow.
Only eight of the index's 30 stocks were in the green, with
Microsoft
(MSFT)
and
The Home Depot
(HD)
contributing the most to the upside.
Investors have begun to doubt earlier predictions that the economy and earnings are destined recover in the second half of this year. A new round of major earnings warnings in the past month has pushed some pros to start looking farther out.
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Sector Watch
Investors were seeking shelter in the ultimate defensive sector -- gold. The
Philadelphia Stock Exchange Gold and Silver Index
was 4.3% higher.
Brokerages, which suffer when the market is off, were getting slammed today, with the
American Stock Exchange Broker/Dealer Index
plunging 4.1%.
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Bonds/Economy
Treasury prices have opened higher as stock market weakness continues to shift investing momentum toward safer government securities.
The short end of the money market is once again being buoyed by talk of an intermeeting move by the
Federal Reserve, especially as the broad equity indexes appear to be in danger of slipping a couple of hundred points more. The yield curve, which tracks the data by time-to-maturity, shows the difference between yields of the two-year note and the 30-year Treasury at about 0.9%. This is the widest spread since November 1998.
White House economic advisor Lawrence Lindsey expressed President
George W. Bush's
administration's determination to realign the economy in a positive direction. Talking to an Italian daily newspaper, he said the "right road is lower interest rates and retroactive tax cuts." He also ascribed the spike in consumer price to higher energy costs, terming it a "technical reason."
The benchmark 10-year
Treasury note lately was up to 14/32 to 99 4/32, lowering its yield to 5.117%.
There are no economic releases due for today.
-- Staff reporter Anwar Husain contributed to this article.
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