Coney Island's Cyclone opened June 26, 1927, is 2,640 feet long and takes 100 seconds to ride. Its first drop is 85 feet over planks that feel like they're about to crumble away -- and is the chief reason enthusiasts reckon it's one of the best wooden roller coasters in the world. But sometimes it doesn't hold a candle to the U.S. stock market.
Pullbacks on the Asian bourses and heavy selling in the futures market made for a big drop at the open this morning: at the outset, the
Dow Jones Industrial Average
lost 193 points; the
Nasdaq Composite Index
, a gut-wrenching 209. But no more than 10 minutes into trading, stocks started to come back. Past noon the Dow had made it into positive territory, while other indices, though still down, weren't down so much that you felt like you needed to skip lunch.
Some observers worry, however, that there may be more selling before the day is out.
"We got a bounce here, but to tell you the truth, I don't have much faith in it today," said Paul Rich, a trader at
. "I don't think it's going to hold. If it does, I'll be amazed."
The Dow lately was up 11 to 9940, while the broader
was down 5 to 1391.
Things remained worse in the Nasdaq. The tech-heavy index was down 59, or 1.2%, to 4990.
Dot-com and small-cap proxies were also in a bind.
TheStreet.com Internet Sector
index was down 18, or 1.4%, to 1302. The
was down 7, or 1.1%, to 597.
Banks were bucking the trend, though in a limited way.
was up 1 15/16, or 2.5%, to 80 5/8 after
upped earnings estimates. The
Philadelphia Stock Exchange/KBW Stock Index
was up 13, or 2%, to 658. Bear in mind that Friday it hit a low not seen since October 1998.
Meanwhile, the Treasury market was benefiting from the fear in stocks. The bellwether 10-year note was up 7/32 to 101 1/32, its yield easing to 6.36%.
Charles Blood, the
Brown Brothers Harriman
director of financial markets strategy who has been rending his clothes over the stock market since the fall, figures the thing really is going to give up the ghost pretty soon here.
"I think we're going to see a major decline in tech stocks here," he said. "The risk in the S&P is for a correction of 30%, peak to trough." (That would be a drop to around 1030.) The problem, thinks Blood, is that the
will continue to hike interest rates, and he thinks that will eventually hurt techs -- but not in the way you might think.
There are a lot of people who argue that higher rates cannot hurt tech earnings, because tech companies are not reliant on the credit markets and because global demand for tech is so strong. Blood does not disagree with this. But he does point out that when the Fed raises rates, there is less money flowing into the system. Eventually this liquidity drain will take its toll on tech stocks -- there simply won't be as much money coming to market to support them. And so, they will fall.
Though there's a general feeling on Wall Street that tech may pull back, or at least pause for a bit, not many are hanging crepe on the bull market the way Blood is.
"If money starts to fly out of tech," said Rich, "it's going to go right into the Old Economy stocks before it goes into bonds or something like that."
New York Stock Exchange:
1,126 advancers, 1,727 decliners, 563 million shares. 26 new 52-week highs, 178 new lows.
Nasdaq Stock Market:
1,450 advancers, 2,657 decliners, 971 million shares. 112 new highs, 123 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.