The market was trudging along as it headed into the weekend.
The major indices, including the
Nasdaq Composite Index and the
Dow Jones Industrial Average, were stuck firmly in the red. The Nasdaq's been on the downside all session, but the Dow's had a volatile morning, even at one point crossing the flatline for a brief visit to the green.
Tech stocks were again out of favor with investors. Bad news from software maker
Oracle
(ORCL) - Get Report
and PC giant
Dell
(DELL) - Get Report
helped sparked today's selloff.
Dell was under pressure from
reports that it was cutting expenses by up to 10% and that it may cut as many as 4,000 jobs. And Oracle was the victim of some cautious comments from a Morgan Stanley analyst after CEO Larry Ellison talked of weakness in the company's database business. Ellison has sold about 27 million of his shares in the last two weeks, according to
SEC
filings.
Networker
Cisco
(CSCO) - Get Report
continues to bleed, down 3.1% to $29.12. It was the most actively traded stock on the Nasdaq for the third day in a row today. The company
announced that it missed earnings targets for the first time in three years Tuesday after the market close and gave a murky forecast for the future.
The ever-troubled communications-equipment maker
Lucent
(LU)
was taking a beating, after the
The Wall Street Journal
reported this morning that it is being investigated by the SEC for possible fraudulent accounting practices. Regulators are looking at the company's booking sales procedures and software-licensing agreements. Specifically, the SEC is investigating whether Lucent improperly booked $679 million in revenue during its 2000 fiscal year, which ended Sept. 30. The stock was off 11.2%, approaching a low hit in late December of $13.50.
But that news wasn't any huge surprise. Lucent already did its own investigation of the revenue booking and in December restated its financial results to eliminate the $679 million in revenue. And with so much bad news already priced into the stock, investors probably wonder how much further it can fall.
After five disappointing quarters, a string of high-level executive firings and a round of lower-level layoffs, the company's stock price is already down 78% from the highs of last year.
TheStreet.com
took a look at Lucent's
approach to accounting early on, and has been following Lucent's
other woes.
Mobile-phone maker
Nokia
(NOK) - Get Report
was off 6.8% after
UBS Warburg
removed the mobile-phone giant from its list of top-10 global technology stock picks. That move helped knock down overseas markets.
The good news is that network storage systems maker
Network Appliance
(NTAP) - Get Report
was up 10% to $38.75 after its earnings report from last night. The bounce was a nice relief from the drag it experienced this week after being caught up in the Cisco conundrum.
The company reported fiscal third-quarter earnings that beat estimates after the market closed Thursday. But the company's sales came in a bit below forecasts, an uncharacteristic shortfall for a company well-positioned in one of the fastest-growing technology markets. It is yet another sign that corporations aren't spending as freely on tech gear as they once were.
TheStreet.com's
Tom Lepri
took a look at
what the report means for Network Appliance.
And those makers of
Toy Story
and its sequel,
Pixar Animation Studios
(PIXR)
, were celebrating today after posting better-than-expected results for the fourth quarter. The company said the sequel's home video and merchandise sales help to more than triple its revenue. The stock was up earlier but had lately turned down slightly.
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Sector Watch
Defensives were relishing this latest bit of weakness in tech stocks, with oil, tobacco and drug stocks bouncing.
Blue-chip
ExxonMobil
(XOM) - Get Report
was bouncing 1.8% to $85.99. The stock's been beaten down in the past couple days, so the recovery was a nice breather for the stock. The
American Stock Exchange Oil & Gas Index
was 2% higher.
The
American Stock Exchange Pharmaceutical Index
was rising 0.6%, and the
American Stock Exchange Tobacco Index
was lifting 1.3%.
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Bonds/Economy
Treasury prices are up as weakness in equities has brought investors' focus back to notes and bonds. The money market is also consolidating after absorbing $32 billion in government debt that was auctioned over the last three days. The long end of the market is showing greater strength, with the 30-year up by half a point.
A $5 billion auction of three-year notes from
Freddie Mac
should keep the trading volume up today. Next week, $21 billion worth of three- and six-month Treasury bills will be sold.
The benchmark 10-year
Treasury note lately was up 9/32 to 99 19/32, lowering its yield to 5.052%.
Analysts will once again be hoping for
Federal Reserve chairman
Alan Greenspan to hint of more rate cuts as he addresses the
Senate Banking Committee
on Tuesday. In the wake of the Fed's two January cuts, the
Bank of England
cut interest rates yesterday and the Japanese central bank followed through with a cut overnight.
Treasury Secretary
Paul O'Neill
said in his round of conversations with television networks yesterday that he agrees with Greenspan's recent view that the economy is near zero growth. O'Neill estimates the present growth rate at 0.5% - 0 .6%. But he expressed confidence that technology-led productivity gains would take the nation to a "golden era of economic prosperity" as 80% of their contribution was still to be realized. His statements suggest that last quarter's higher-than-expected productivity gains amid a weakening economy were due to structural improvements in supply-chain management techniques.
There is no economic news today.
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