Nasdaq Down More Than 5% as Mid-April Lows Approach

With upside catalysts still lacking, traders are continuing to sell into a low-volume decline.

Author:: Eileen Kinsella
Publish date:: May 10, 2000 1:20 PM EDT

Pass the Prozac, please.

The stock market was looking blue as Wall Street muddled through another down day. Stocks stumbled out of the gate and stayed mired in the red. Not even good news from tech superstar

Cisco

(CSCO) - Get Report

could bring forth a smile.

The

Nasdaq Composite Index was plummeting 186, or 5.2%, to 3399. It has traded as low as 3384.19, just 62.90 above its

April 14 close of 3321.29. The

Dow Jones Industrial Average was down 157, or 1.5%, to 10,380.

TheStreet.com Internet Sector

index was off 46, or 5.4%, to 805. The small-cap

Russell 2000 was down more than 17, or 3.6%, to 473 and the

S&P 500 was slumping 28, or 2%, to 1384. Indices have gone one way only today on light volume, as investors stay on the sidelines ahead of Tuesday's

FOMC meeting.

"There are no rays of light and no rationale today," said Adam Wagner, president of

Wagner Hermann & Herbst

in Houston, adding that light volume is the "only saving grace" today. "When are the buyers going to step up?"

"There is not a lot going on, there's a lot of complacency out there," said David Baker, head of program trading at

Deutsche Bank

. "It seems like a lot of portfolio managers have had a tough time this year and are just taking a deep breath on the market."

You know things are bad when Cisco is unable to spread a little cheer. Despite a better-than-expected earnings report

last night and a handful of upbeat analyst comments, the stock was sliding 6%. Cisco has been under pressure this week after

Barron's

ran a bearish story questioning the networking giant's valuation and strategy of growth through acquisitions

Many market watchers thought a solid report would relieve some of that pressure, but so far that's not the case. "I think this is more a market attitude at large" than anything more specific about the stock, said Wagner. "The money on the sidelines appears to still be there. What is it going to take for it to come in?"

Other networkers including

3Com

(COMS)

and

Redback Networks

(RBAK)

were also headed south. 3Com was falling 9.8% while Redback was off 3.5%.

Motorola

(MOT)

was moving fast on the downside, lately off 14.2%. This morning,

Salomon Smith Barney

downgraded the stock and cut earnings estimates, saying that although its long-term positive outlook on Motorola had not changed, it believed the assumptions behind its more optimistic view may not materialize. Salomon also mentioned that the loss of a major customer to

Nortel Networks

(NT)

suggested that better-than-expected results in 2000 were unlikely.

Other wireless stocks were feeling Motorola's pain with

Ericsson

(ERICY)

down 7.2% and

Nokia

(NOK) - Get Report

off 7.8%. Even Nortel couldn't get a break despite its "major" new customer and lately was sliding 7.6%.

Wagner said just as the market was complacent with being so high a few months ago, it's doing the same thing on the downside. "This is almost like a psychological depression in the market, as if it's just too tired to do anything," he said. "That is almost the way it feels just sitting here." Wagner said he would like to see a rally on the heels of next Tuesday's rate news from the Fed, but also thinks the hesitation and stagnant feel could drag on if a tightening bias becomes the next investor focal point.

Intel

(INTC) - Get Report

was sustaining some injury, down 6.4%, after it said it would replace motherboards that have a defective memory component. The chipmaker said the problem caused some computer systems sold since last fall to reset, reboot or stall.

Most other chip stocks were taking it on the chin as well, with the

Philadelphia Stock Exchange Semiconductor Index

off 7.4%.

Applied Materials

(AMAT) - Get Report

was off 5.7%, while

Advanced Micro Devices

(AMD) - Get Report

was down 4.4%.

Abercrombie & Fitch

(ANF) - Get Report

was looking pretty ragged, off 9.2% after a number of analysts downgraded the stock this morning. Yesterday the clothing retailer warned about its second-quarter earnings outlook. Meanwhile, the retailing sector as a whole was on the upside, with the

S&P Retail Index

up 1.9%.

Champion International

(CHA) - Get Report

was a rare winner today, up 8.6% and on pace for a 52-week high as investors cheered on the bidding war between

International Paper

(IP) - Get Report

and Finnish papermaker

UPM-Kymmene

(UPM)

for control of the Champ.

After International Paper wrote up a $75-a-share bid earlier this morning, UPM-Kymmene came back with a $70-per-share all cash bid and lately said it is considering what to do next. International Paper was down 2.9%, while UPM-Kymmene was up 2.6%. The

Philadelphia Stock Exchange Forest and Paper Products Index

was lifting 2.1%.

The

Dow Jones Utility Average

was up 1.5% while the

Dow Jones Transportation Average

slid 1.6%.

The 10-year Treasury was the favored airline for today's flight to quality, up 11/32 to 100 5/32, its yield easing at 6.48%.