Stocks were continuing their recent decline today, but the major indices were well off their lows of the morning. After two days of crushing losses, the
Nasdaq sank to its lowest close in almost two years yesterday, while the
Dow swooped down 204 points on the day, matching its closing low for the year.
Almost 150 Nasdaq stocks were trading at new 52-week lows this morning, and little in tech was being spared. Decliners were beating advancers on the index by 24 to 7, and on the
NYSE by 17 to 9. Volume was heavy and thick.
Investors were dropping Internet, PC making and networking stocks like hot potatoes, but chip stocks were mostly being spared. Meanwhile, retail and financial stocks continued yesterday's slide. Earlier strength in some of the defensive plays, like the tobacco and drug stocks, had lately faded. But energy, gold and paper stocks were still on the up.
Within tech, the storage sector was winning the prize for most reviled sector this morning after sector leaders
warned of slowing in coming quarters. Brocade was the biggest trade on the Nasdaq; it was lately down 10.7%, having rebounded slightly from a new 52-week low of $33.31. EMC was down 9.5% to $39.06. Other storage stocks were also getting bashed --
was falling 3.8% to $23.88 and
was bumping down 3.3% to $33.25.
Brocade warned after the close of regular trading yesterday that revenue growth in the second quarter would be "very modest" -- perhaps flat -- and lowered its earnings target for 2001 by 2 cents. EMC said its sales could fall as much as $1 billion below its own expectations.
Another big mover was
. Sun was one of the three-most actively traded on the Nasdaq and it hit a new 52-week low before coming back a bit. It was lately up 6.1% to $20.81. Sun got bashed by
yesterday; the company holds its midquarter conference call with analysts today after the close.
One tech name was getting a major boost this morning: broadband network specialist
, which was up 87.3% to $23.06 after Germany's
announced it had agreed to buy the company for $1.5 billion in cash.
Dow was feeling the most weight from consumer staples stock
and drug stock
, together cutting 22 points from the index.
One of the market's problems is that investors have begun to doubt earlier predictions that the economy and earnings are destined recover in the second half of this year. Following some major earnings warnings from telecom-equipment makers
, among others, in the past few weeks, the pros are now looking farther out.
Still, help may come sooner than some think, in the form of more interest rate cuts. The
fed funds futures -- which help predict
Federal Reserve actions on interest rates -- are fully pricing in a half-point rate cut by the March 20
FOMCmeeting, while chances of an intermeeting cut are at a 60% to 80% rate of probability, according to the futures. Rate cuts help get the economy going again by making cash more easily accessible to corporations and consumers.
Meanwhile, this morning's
leading economic indicators
index for January rose 0.8%, more than double the expected 0.3% and December's 0.6% drop. A composite index of 10 economic indicators, this index is designed to predict economic activity six to nine months in the future -- so it's considered a pretty good forecaster of the ups and downs of the business cycle.
The index's indicators include: the average manufacturing-worker workweek, initial jobless claims, vendor performance, manufacturers' new orders for nondefense capital goods, building permits, the level of the
S&P 500, the inflation-adjusted measure of money supply, the interest-rate spread between the 10-year Treasury note and the
fed funds rate and the expectations portion of the University of Michigan
Consumer Sentiment Index.
Initial jobless claims for the week ended Feb. 17 came in this morning slightly below forecasts, showing that the economy may be a bit stronger than some people had thought. Jobless claims for the week totaled 348,000, compared with
consensus forecasts of 355,000. The previous week's numbers were also revised downward to 344,000 from 352,000.
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Semiconductor stocks were getting a second day of relief today. The
Philadelphia Stock Exchange Semiconductor Index
was up 1.6% after rising 0.2% yesterday.
earlier hit a new 52-week high, and was still up 0.96% to $48.52. This stock has climbed steadily since the beginning of last year from $19 in Febuary 2000. The
S&P Tobacco Index
was just barely rising, up 0.04%.
Elsewhere in the defensive stock playground, the
Amex Pharmaceutical Index
was down just 0.6%.
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Treasury prices are moving up as a result of steady economic data and continued weakness in stocks. The money market had been weaker at the opening bell as traders continued to worry about the potentially inflationary implications of higher-than-expected producer and consumer prices in January. Higher inflation reduces the chances of a near-term interest rate cut, which the bond market doesn't like. But with equities getting battered yet again today, investors are looking toward government securities as the safest place for their money for now.
The benchmark 10-year
Treasury note lately was up 4/32 to 99, lowering its yield to 5.131%.
In economic news, the
initial jobless claims
), which track the number of people applying for unemployment benefits for the first time, rose to 348,000 in the week ended Feb.17. Although this is 4,000 more than the prior week's revised number, the figure is substantially lower than the 355,000 that economists had predicted in a
poll. The four-week moving average, however, climbed for the third consecutive week, to 350,750. Still, recent figures suggest that the string of layoffs may be drawing to a close.
The index of
leading economic indicators
), which forecasts economic activity more than half a year in advance, rose by 0.8% in January after having fallen for two consecutive months. The anticipated rise had been for 0.3%.
) fell by 3 points, to 76, last month. The gauge, which had a base value of 100 in 1987, tracks jobs openings in newspapers nationwide.
Consumer Comfort Index
chart ), which measures how consumers view the economy's direction and their participation in it, fell by a point, to 19, for the week ended Feb. 18.
Finally, the surplus in the
) rose to $76.38 billion in January from $32.67 billion in December. It is also $14.2 billion higher than the number from a year ago. Such excess in the government's receipts over its expenditure has played a large part in the intended lowering of taxes and the possible stoppage in issuance of the long bond.
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