After weeks of drubbing and failed rallies, a few brave souls went to market this morning with cash in their pockets and an itch to spend.
A tepid initial bounce on the
Nasdaq quickly faded, but the tech-heavy index had come back to life by mid-morning and was climbing into the green. The blue-chip
Dow never lost its sparkle, and was lately rising steadily higher.
Most tech sectors were climbing except for the Internet stocks, though the semiconductors were getting the most love. The
Philadelphia Stock Exchange Semiconductor Index
was 6% higher. Elsewhere, buying was most enthusiastic in the interest-rate sensitive financials and retailers and in defensive sectors like paper, energy and tobacco. Other safety stocks like utilities, drugs and gold were down, however.
Earlier nibbling in tech stocks turned into buying, and some beaten-down bellwether tech stocks were getting a nice lift -- semiconductor
was up 5.3% to $33.63, PC-maker
was 3.4% higher to $17.22, and
was up 8.2% to $39.50.
A major support on the Dow was
, which has helped make or break the blue-chip index several times in recent weeks. The financial titan was up 4.6% to $166.38, adding 44 points of upside to the index. Retailers
were also helping, with 16 and 11 points, respectively. And Intel was delivering a 10-point boost to the Dow.
Yesterday, more than 700 stocks hit 52-week lows on the
Nasdaq, which broke below 2400 for the first time since the first week of June 1999. It wasn't just a 52-week low -- it was an 81-week low.
Some were wondering today if the tech-heavy Nasdaq could possibly have an eighth down day in a row. But the slowdown in tech earnings is starting to look more severe than anyone had expected, and some say this is no time to try buying on the
Another tsunami of companies lowered or missed earnings estimates last night and this morning, and investors were dumping these stocks furiously. Even those that didn't miss targets were being punished. Most notable among them were telecom equipment and networking company
and copy giant
. At $76 a share last December, Lucent was trading at a low not seen since March of 1997, down 9.3% to $14.13. Xerox, which has seen its stock plunge from $62 in January, was falling 17.7% to $4.94.
Hampering these stocks were fears of a serious liquidity crunch. Beleaguered Xerox announced that it would
miss its fourth-quarter earnings estimates by a "wide margin." And Lucent warned for the fourth time this year that it would miss earnings targets. The company said it would have significant losses in its current quarter and announced a restructuring plan this morning. This follows the announcement last night from former parent company
, which lowered its own
Lucent blamed its troubles on the problems among competitive local phone companies, the slowdown in capital spending among established telecom companies and lower software sales.
Slowing capital spending has been cited by several technology companies as the reason for earnings weakness in the past few months. And it illustrates the interdependency between the different technology industries. The economic slowdown bites into one company and then bites into all as weakness trickles down.
All of the big handheld organizer companies were also getting whacked, despite better-than-expected earnings from two of them last night. Both
Research in Motion
beat expectations. But
Palm was falling over 27.4% to $27.69, while
Research in Motion was down 5% to $71.13 and
was down 9.1% to $40.13.
Other warnings also crowded the post-close scene last night. Semiconductor company
reported earnings 2 cents below its target, coming out with earnings of 58 cents per share. Internet-broadcasting enabler
warned it would miss earnings targets, as did
. Micron was lately up $2.69 cents to $32.50; RealNetworks was plummeting, down $5.78 to $5.81; and Conexant was off 26.4% to $15.
The winds didn't shift much following this morning's economic data, in at 8:30 a.m. EST. Final third-quarter
gross domestic product
, known as GDP, showed that the market value of goods, services and structures produced in the economy grew more slowly than originally expected. GDP came in at 2.2% vs. the previous estimate of 2.4%. Jobless claims came in higher than expected, which might reduce concern over inflationary pressures from a tight labor market. Jobless claims for the week ended Dec. 16 rose to 354,000 from 320,000 the prior week.
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TheStreet.com Internet Sector
managed to reverse its losing streak. The index was up 1.1% despite continued declines in
. AOL was off 2% to $36.34 while Yahoo! was down 1.8% to $27.50, a new 52-week low for the Internet portal company.
Dow Jones Utility Average
was giving back some of yesterday's gains, off 1.7%, as was the
Amex Pharmaceutical Index
, down 1.3%. These two sectors were the few spots that escaped yesterday's pain.
The tobacco stocks, which have fared fantastically this year, continued making modest gains. The
S&P Tobacco Index
was up 0.5%.
wasn't rising though. The second-biggest gainer on the Dow this year was down 2.3% to $43.13.
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The benchmark 10-year
Treasury note lately was down 1/32 to 105 2/32, raising its yield to 5.081%.
In economic news, the
Philadelphia Fed Index
), a regional manufacturing-sector indicator, dropped to 6.1 in December, its lowest level since September 1998, from 5.2 in November.
Initial jobless claims
) rose, indicating slackening demand for workers. First-time claims for unemployment insurance rose to 345,000 from 320,000 the previous week. The four-week average rose to 347,250, a new 29-month high, from 343,250.
gross domestic product
) was finalized at 2.2%, down from 2.4%. The third-quarter price deflator, a measure of inflation, was finalized at 1.6%, down from 1.9%. Economists polled by
had forecast no revisions. The change in the GDP was due principally to slower rates of inventory-accumulation by businesses, federal government spending, and capital spending by businesses.
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