(Updated from 11:11 a.m.)
Just yesterday, we were laughing and joking about how the market was attracting more investors back and things were looking up, but that was before PC giant
issued an earnings warning.
After yesterday's closing bell, Apple said it expects to miss fourth-quarter earnings estimates. Investors dragged the company's shares into the mud during after-hours trading, cutting the company's value almost in half.
took a closer look at the
plunge in a piece last night.
Morgan Stanley Dean Witter
downgraded the stock this morning. PaineWebber said the sales weakness was Apple-specific, however. This morning, Apple was 50% lower.
But tech may have already been set up for some selling on the heels of triple-digit gains for the
Nasdaq Composite Index yesterday. After seeing losses for a week straight, it closed up 122 points to 3778 Thursday.
The broader market was also having a bad day, with the
Dow Jones Industrial Average and
S&P 500 both down.
"I suspected a selloff anyway, following strength from yesterday," said Rosanne Lang, vice president of program trading at
"I'm not sure we'll give back all of yesterday's gains, but we'll probably vacillate through a big part of it. I don't see where we can pick up any strength," she added. "Apple may just serve as an excuse to see weakness in the techs. A lot of these stocks have rallied back with great strength, despite intraday downswings. It remains to be seen how much upside remains out there on any given day."
definitely weren't seeing any of the upside today. H-P, down about $6.56 to $97.25, was taking about 56 points away from the index, and IBM, off $4 to $111.13, was taking away almost 40 points.
Perhaps the worst news from Apple is that, like
, which warned of an earnings miss Tuesday morning, Apple cited a slowdown in sales across all geographies. This sets them apart from other companies that have blamed expected shortfalls on a depressed euro or rising oil prices. It's bad news for PC-makers at a time when worries over a slowdown in PC sales have been building. The
Philadelphia Stock Exchange Computer Box Maker Index
fell 5.7% this morning after it warned that it expects to report a loss for the third quarter and possibly in the fourth, due to operational "disruptions." The airline was plagued by labor problems over the summer.
announced that it was selling its troubled
unit, in what
The Wall Street Journal
called the "worst-ever corporate deal." Mattel did not disclose a sales price, but said the loss would leave it with an after-tax loss of about $430 million. Mattel was off 4.9%.
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In addition to the slaughter in box makers, semiconductors and transports were bleeding a bit. Natural gas, though, was making some gains.
Philadelphia Stock Exchange Semiconductor Index
lost 4.8% in reaction to
news that business was slow.
Dow Jones Transportation Average
was 2.2% lower thanks to the earnings warning from
. That warning was taking down fellow components
Delta Air Lines
. It also, unsurprisingly, socked the
American Stock Exchange Airline Index
, which lost 3.8%.
American Stock Exchange Natural Gas Index
rose 2.2%. It was lifted by nearly every component, with
Enron Oil & Gas
leading the charge.
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Treasuries are stronger thanks to slumping stocks and the calendar, which traditionally favors the Treasury market on the last business day of the quarter. Pressure to own safe, liquid assets for appearance's sake often prompts buying of Treasuries by portfolio managers who report their holdings on the last day of the quarter, bond market analysts say.
The day's most important economic indicator, the
Chicago Purchasing Managers' Index
chart ), was stronger than expected. It rose to 51.4 in September from 46.5 in August, indicating renewed expansion in the manufacturing sector.
The benchmark 10-year
Treasury note lately was up 7/32 at 99 21/32, dropping its yield to 5.795%.
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