In the final hour of trading, the stock market plunged to its nastiest close in recent memory. The question is: How much worse can this get?
Nasdaq Composite Index finished down 129.4 points to 1923.3, its lowest close since Nov. 19, 1998. It's now down more than 60% from its March 10, 2000, record of 5,048. In this month alone, the technology-laden index is off close to 10% as an onslaught of profit warnings have crushed its components to bits.
Dow Jones Industrial Average tumbled 436.37 points to 10,208.25, its lowest close since Oct. 19, 2000. This was the fifth-largest point loss ever for the blue-chip measure. Among the biggest losers on the index were
S&P 500 Index dropped well below 1210, a level that had been thought to be a bottom for that measure (indeed, it lost more than 4% to close at 1180.16). The S&P 500 is now down more than 20% from its all-time high, and therefore considered to be in bear-market territory.
According to Sam Ginzburg, senior managing director of equity trading at
, trading this afternoon was very choppy. "We're looking for five-minute bottoms," he observed earlier in the day. "But any hedge fund buyers have been met by big gorilla sellers, who are squashing out hopes of an intraday rally." The challenge for traders, Ginzburg thinks, is to live to play tomorrow.
Today's losses in the U.S. come as Japanese stocks plunged to their weakest level since 1985. The yen fell to a 20-month low against the dollar today amid concerns the Japanese government will be unable to restore health to the country's sick economy. Adding to the weakness in the market, Prime Minister
, who is widely blamed for the country's economic weakness, refused to resign as he was scheduled to do this weekend.
In the face of today's losses, market experts do not think that the major averages have hit bottom. "There is no catalyst to take stocks higher," said Scott Curtis, trader at
"Until earnings turn around, and we don't know when that will be yet, we're going to stay in a bear market."
Uncertainty Is Bad
To be sure, the recent bad-news blitz is to blame for today's selloff. "The current river of negative preannouncements for the first quarter of 2001 (459, compared with only 74 at this time last year), puts us on pace to match or exceed the dismal fourth-quarter 2000 season," wrote Joseph Kalinowski, equity strategist with earnings tracker
First Call/Thomson Financial
in a report this morning.
had another loser day, ending down 0.8% to $18.81. On Friday, the networking giant set plans to cut its workforce by as much as 15%. This morning,
Credit Suisse First Boston
lowered its 2001 earnings per share estimate for the stock to 53 cents per share from 60 cents per share. Cisco has been on a steady slide the past several months and is well off its 52-week high of $82.
Cisco's news helped to drive the
American Stock Exchange Networking Index
decreased 10.7% to $49.69,
slid 12.5% to $22.88 and
declined 18.1% to $53.31.
On the heels of
high-profile profit warning last week,
said this morning that it expects first-quarter revenue to fall 14% to 16% below fourth-quarter levels. Having traded up earlier in the day, the stock finished down 2.6% to $9.40.
Silicon Storage Technology
lowered its fiscal first-quarter 2001 earnings and revenue projections, blaming the slumping economy and inventory corrections. Silicon Storage slipped 11.9% to $9.31. The
Philadelphia Stock Exchange Semiconductor Index
had traded higher earlier this afternoon, but ultimately closed lower by 2.9%.
The companies join a slew of other chipmakers that have warned recently, including
Swedish phone maker
( ERICY) was slammed after it
cautioned that it would take a first-quarter loss rather than break even, as it had previously forecast. The company said total sales would be flat or lower compared with the year-ago quarter. Ericsson had previously expected a 15% net increase. It closed off 25.8% to $6.09. Shares of
shed 5.9% to $21.45 and
( MOT) slid 3.5% to $15.
This morning, Ed Kerschner, chief global strategist at
, lowered his earnings-per-share estimates for this year's S&P 500 to $54.50 from $56.50. "With the U.S. economy hitting the proverbial brick wall over the past few months, earnings are weaker than we expected," Kerschner wrote in a research note. "Earnings are currently holding up fairly well in non-cyclical areas, but they are plunging in technology, commodities and consumer cyclicals."
Carnage spilled across various sectors of the market today, with technology indices feeling the most pain. The
Nasdaq Telecommunications Index
ended the day down 8% and the
TheStreet.com Internet Sector
index, commonly known as the DOT, lost 6.8%.
Also getting killed today were the financial stocks. The
Amex Broker/Dealer Index
was walloped today, as it's assumed that with falling stock prices and a depressed investing environment, the brokers are going to see reduced trading volume. It lost 6.5%. The
Philadelphia Stock Exchange/KBW Bank Index
fell xx% today. Traditionally a defensive sector, the
S&P Insurance Index
dropped 3.3% today.
Among other defensive sectors there was very little relief. The
S&P Tobacco Index
dropped 2.5% and the
Amex Pharmaceutical Index
lost 2.8%. Commodity-related indices were poor, as the
Philadelphia Stock Exchange Forest & Paper Products Index
lost 4.9%, the
S&P Chemical Index
fell 3.4%, and the
Amex Oil & Gas Index
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Foreign stock indices took their cues from Friday's selloff in the U.S. London's
was at a 17-month low, closing down 90.8 to 5826.5. Across the channel, the Paris-based
finished off by 126.5 to 5242, and the German
lost 158 to 6047.
Asian markets were trashed overnight, with the
sliding another 3.6% overnight to a 16-year low, while the
lost 2.94%, hitting a 10-month low.
For more on the world stock markets, check out
global indices information.
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