day after market-friendly productivity numbers had tech stocks leaping and blue-chips groping for higher ground, the stock market came back to earth in unison today.
Blue-chips took the brunt of the selling that emerged midmorning to usurp early indications of another advance.
Catalysts for the downturn included a realization that yesterday's economic data will not likely prevent the
from tightening next month, and renewed attacks on various Web sites by hackers. The bond market's afternoon reversal after
suggested the concerns about the supply of long-term bonds were overdone also contributed to the stock market's weakness.
The price of the 30-year Treasury bond fell 1 1/32 to 97 17/32, its yield rising to 6.31%.
Whatever the reason (if there was one) for the stock market's decline, market players weren't overly concerned about what looked like an intense example business as usual for the blue-chips and an anomaly for the tech stocks.
"The market is going to do whatever the market wants to do any given day
when it's driven more by emotions than fundamentals," said Alan Skrainka, chief market strategist at
in St. Louis. "You're really groping to find the bad news. I'd term it just a bit of consolidation after very strong gains."
Dow Jones Industrial Average
fell 258.44, or 2.4%, to 10,699.16 after trading as high as 10,957.60 early on. Weakness in
, the latter the subject of a critical article in
The Wall Street Journal
, put heavy downward pressure on the Dow.
The venerable index was also hampered by downturns in
, down more than 5% on word it faces
regulatory challenges in Europe, and
, which slid 4%.
After rising as high as 4460.76, the
Nasdaq Composite Index
closed at its session low, down 64.71, or 1.5%, to 4362.79.
Weakness in the Comp was masked somewhat by strength in bellwethers
. Cisco rose 2.1% to 128 13/16 after trading as high as 135;
last night the computer networking giant posted better-than-expected earnings and set a 2-for-1 stock split. Sun gained 5.3% after
upped its earnings estimates. Still, the
Philadelphia Stock Exchange Semiconductor Index
fell 1.8% despite strong gains by
Applied Micro Circuits
Deutsche Banc Alex. Brown
initiated coverage of the latter three with favorable recommendations and optimistic price targets.
TheStreet.com Internet Sector
index fell 14.84, or 1.3%, to 1146.83, ostensibly because of concerns about the latest round of attacks on various Web sites.
shed 5.4% and
lost 4.5% among DOT components hit by
hackers in recent days.
Conversely, Internet security firms rose in anticipation of more demand for their wares, including
, which rose 54%.
The DOT was buoyed by
, which jumped 10.4% after setting a 3-for-1 stock split.
BroadVision also gave a boost to
TheStreet.com New Tech 30
, which closed down 6.92, or 1.1%, to 653.99 nonetheless. Unveiled Jan. 5, the TSC New Tech 30 is a market-cap-weighted index focusing on tracking the so-called hot money part of the market. A list of index components is available at
fell 30.07, or 2.1%, to 1411.65 amid broad weakness in retailers, drugmakers, financials and just about every other major industry group. Precious metal stocks proved an exception; the
Philadelphia Stock Exchange Gold & Silver Index
slid 1.49, or 0.3%, to 536.
Big Bubbles, No Troubles
While no one was lamenting the Comp's pause from its recent record-setting run, market players were expressing more concern about the blue-chip averages' latest decline.
Greg Nie, chief technical analyst at
First Union Securities
in Chicago, noted the Dow fell "noticeably" below its 200-day moving average of 10,886 today.
"More critical than the averages, breadth statistics are stinking it up again," Nie said. "Underneath the surface, breadth indicators have been really weak. The Big Board advance/decline line is establishing lower lows
after it provided some encouragement" early in the year.
New York Stock Exchange
trading, 1.052 billion shares were exchanged while declining stocks led advancers 1,966 to 1,024. In
Nasdaq Stock Market
action 1.793 billion shares traded while losers led 2,341 to 1,817. New 52-week lows bested new highs 175 to 101 on the Big Board while new highs led 305 to 82 in over-the-counter trading.
Regarding the Comp, Nie observed the index pulled back today after rising to about 45% above its 200-day moving average around 3047. Noting the tech-resplendent index pulled back twice in January after hitting similar levels, the technician surmised "even under the new math, we're pushing the envelope."
If the index continues to fade it might suggest there's a "new ceiling developing" and a "relationship to watch," he said. "We're stretched out within the stretched-out environment."
Nie replied affirmatively when asked whether he expects today's selling will prove to be the start of another downturn for the Comp. But given the near "oversold" condition in blue-chip averages, he expects any pullback to be "contained before a real big move down occurs."
Furthermore, such a "garden variety" decline will set the stage for a "healthier rally" to commence.
Among other indices, the
Dow Jones Transportation Average
fell 32.48, or 1.3%, to 2550.32; the
Dow Jones Utility Average
slid 1.88, or 0.6%, to 309.43; and the
American Stock Exchange Composite Index
shed 5.06, or 0.6%, to 880.28.
For coverage of today's top stocks in the news, see the Company Report, published separately