"The body, Rocky, the body!" was the plea of
have been a rematch, or a remake -- much less four). Today, sellers continued to pound the head of the
bull market, whacking away at the tech leadership with abandon.
Blue-chips stood up well under the assault, but even a solid rebound in bonds failed to prevent the tech malaise from dragging stock proxies lower. The price of the 30-year Treasury bond rose 31/32 to 95 5/32, its yield falling to 5.59%.
were main catalysts of the tech fire sale.
Compaq shed 13.7% after its earning estimates were cut by both
analyst Steve Milunovich (who did the same to
yesterday ) and
Credit Suisse First Boston
. Adding insult,
Donaldson Lufkin & Jenrette
each lowered recommendations on the PC giant. Micron fell 13.8% after
downgraded the chipmaker to market outperform, removing it from its recommended list
A host of technology bellwethers, particularly chip and equipment makers, tumbled in the wake of the downgrades. The granddaddy of tech proxies, the
Nasdaq Composite Index
closed down 38.79, or 1.7%, to 2288.03 after trading as low as 2277.18 intraday.
Chip and chip-equipment bellwethers were most heavily damaged:
, shed 12.7%, and
, fell 9.2%. The
Philadelphia Stock Exchange Semiconductor Index
PC and related names tumbled in sympathy with Compaq:
was off 5.1%, and
and Dell each fell at least 2%. The
dipped 2.5%, and the
Morgan Stanley High-Tech 35
Dow Jones Industrial Average
fell 59.76, or 0.6%, to 9306.58, with tech components
accounting for about two-thirds of the decline. The Dow managed to rise from its intraday worst of 9252.52 behind strength in cyclicals such as
fell 6.69, or 0.5%, to 1238.33, up from its nadir of 1226.25. Strength in select financials such as
, drug makers such as
and transports such as
Delta Air Lines
prevented wider losses. The
fell 0.43, or 0.1%, to 392.26.
'I think it's only a nasty correction,' said Ladenburg Thalmann's Tony Dwyer. 'We're correcting some of the excesses, which is what I called for. At some point over the next few weeks we're going to have a helluva buying opportunity.'
Internet favorites fared better than traditional tech names, led by
TheStreet.com Internet Sector
rose 2.67, or 0.5%, to 510.55 and
TheStreet.com E-Commerce Index
gained 1.05, or 1.1%, to 97.11.
"With all the lousy news that's come out this week --
comments, the bonds under pressure other than today, and what's gone on in the tech area, I think the market really gave a pretty good account of itself," said Ned Collins, executive vice president of U.S. stocks at
Daiwa Securities America
. "Obviously there was some pain, but all in all I though it acted pretty well and wouldn't be surprised to see it act better next week."
Despite a heavy economic calendar next week, Collins is not overly concerned about the bond market reverting to a downward trend, which was "an overreaction to news that might not be as bad as it first appeared," he said. "The first quarter is always a time when you have supply in the bond market. In the rest of the year we'll be floating fewer bonds and it gets down to supply and demand. I wouldn't be surprised to see a rally in bonds and it could help stocks."
Traders may have been cheered by the market's resiliency, but Don Hays, director of investment strategy at
Wheat First Union
in Richmond, Va., likely was not. In a research report this morning, Hays said he was paying "a lot of attention to technology stocks," including IBM, Micron and Intel.
"Since this sector has been the leadership of this
-induced bull market since October of last year, we believe the next move will be very telling on the staying power of the bull," he wrote.
Regarding Intel, the strategist said: "An intraday decline below 122 1/2 would be a definite breakdown, and we believe an ominous sign for the technology group as a whole."
Intel closed at 119 15/16 after trading as low as 118 7/8; Hays could not be reached for additional comment.
New York Stock Exchange
trading, 784.6 million shares traded while declining stocks edged advancers 1,496 to 1,440. In
Nasdaq Stock Market
activity, 904.9 million shares were exchanged while losers led 2,129 to 1,899. New 52-week lows led new highs 99 to 19 on the Big Board and by 80 to 31 over-the-counter trading.
Prescience or Piling On?
If the heavy selling in tech caught market players by surprise, Tony Dwyer, chief market strategist at
, was not among them.
Dwyer, you'll recall, predicted a downturn in big-cap tech stocks back on Feb. 1, as first
. In a research report last night, he warned clients to expect an additional 10% decline in the Nasdaq Comp.
"We have not changed our opinion that there should be a further correction in the equity markets, concentrated in Nasdaq high-technology stocks," Dwyer wrote. "Our thesis remains that the markets have already priced in many current and anticipated positive fundamental factors. As a matter of fact, we believe that many high-tech stocks have actually priced in positives that won't transpire for years."
The selling today "is confirming what my view was, which is, high-beta, high-tech stocks are getting hammered," he said in a follow-up interview today. "It's interesting that the Dow is not getting hit that hard, which is because the Nasdaq stocks were the ones most extended."
Dwyer eyes 2100 as a short-term downside target for the Nasdaq, but does not view the selling as fundamentally driven, believing fear of higher interest rates is "misplaced" as inflation remains dormant.
"I think it's only a nasty correction," he said. "We're correcting some of the excesses, which is what I called for. At some point over the next few weeks we're going to have a helluva buying opportunity."
Among other indices, the
Dow Jones Transportation Average
fell 12.72, or 0.4%, to 3207.43; the
Dow Jones Utility Average
slid 0.24, or 0.1%, to 293.87; and the
American Stock Exchange Composite Index
gained 4.82, or 0.7%, to 698.29.
For the week, the Dow industrials fell 33.37, or 0.4% while sliding 0.6% for the month of February. The S&P 500 shed 0.86 or 0.1% for the week but fell 3.3% for the month. The Nasdaq Comp rose 4.58, or 0.2%, for the week but shed 8.7% for the month. The Russell 2000 fell fractionally for the week and 8.2% for the month.
Elsewhere, TheStreet.com Internet index rose 39.35, or 7.7%, for the week but fell 9.2% in February and TheStreet.com E-Commerce Index gained 2.51, or 2.6%, for the week but fell 19.8% in the month. The Dow transports rose 72.92, or 2.3%, for the week but just 0.1% for the month; the Dow utilities shed 1.51, or 0.5%, for the week and 3% in February; and the Amex Composite rose 5.72, or 0.8%, for the week but fell 2.4% for the month.
Elsewhere in North American equities today, the
Toronto Stock Exchange 300
edged up 5.99 to 6312.69 and the
Mexican Stock Exchange IPC Index
lost 32.06, or 0.8%, to 4260.80. For the week, the TSE 300 fell 96.85, or 1.5%, and the IPC rose 60.68, or 1.4%. For the month, the TSE dropped 6.2% and the IPC jumped 7.7%.
Friday's Company Report
Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.
As noted above, Compaq tumbled 5 5/8, or 13.7%, to 35 3/8, off its session low of 34 1/2, after Merrill Lynch's Steve Milunovich lowered his first-quarter earnings view for the PC maker to 30 cents from 35 cents a share and Credit Suisse First Boston's Michael Kwatinetz slashed his first-quarter figure to 31 cents from 36 cents. PaineWebber dropped its rating on Compaq to neutral from buy and Donaldson Lufkin & Jenrette lowered it to market perform from buy. Yesterday, Milunovich said the PC industry's long-term revenue growth rates may be slowed down by price wars and growing customer demand for lower-priced systems. IBM dropped 3 7/8 to 169 3/4, off its session low of 166 1/2; Dell dropped 1 5/8 to 80 1/8, off its session low of 78; and Gateway dropped 7 7/16, or 9.3%, to 72 11/16, near its session low.
Elsewhere in slaughtered tech concerns, Micron Technology plunged 9 3/16, or 13.8%, to 57 5/8, off its intraday low of 54 3/4, after Goldman Sachs removed the stock from its recommended list, downgrading it to market outperform. The firm cited valuation concerns and the potential for pricing weakness in the chip market. Following a piece in the
Los Angeles Times
suggesting that some PC makers will disable the controversial ID in the Intel's new Pentium III chip, the stock dwindled 7 3/4, or 6.1%, to 119 15/16, off its intraday low of 118 7/8. Also, a civil liberties group announced plans to file a complaint with the
Federal Trade Commission
alleging that the release of the Pentium III chip is an unfair and deceptive trade practice.
On the flip side,
flew 26, or 123.8%, to 47 1/8 after Goldman priced its 2 million-share IPO top range last night. The lead underwriter had raised the price range to $19 to $21 from $11 to $13 shortly before the pricing. Elsewhere in new issues,
rallied 2 3/4, or 17.2%, to 18 7/8 after Credit Suisse First Boston priced its 4 million-share IPO above range at $16 a share. Intraware provides Internet-based business software services.
flourished 1 3/4 to 88 15/16 on general Internet strength and word that an agreement with
may be in the works. Telephone lost 2 3/8 to 82 1/8. Elsewhere in Net news, eBay vaulted 34 9/16, or 11.5%, to an all-time high of 334 ahead of Monday's 3-for-1 stock split.
Mergers, acquisitions and joint ventures
slid 9/16 to 47 after the
reported that the management of
, Hoechst's largest shareholder, is said to be divided over whether to support a proposed merger between the company and France's
. Kuwait Petroleum's 24.5% stake in Hoechst puts it in a position to thwart the plan when Hoechst shareholders vote on the merger May 4, the newspaper said. Rhone-Poulenc lowered 1 9/16 to 46.
picked up 3 9/16, or 9%, to 43 on continued speculation that it will be acquired by Sweden's
. Volvo skidded 3/4 to 25 1/2.
hopped 2 1/8, or 7.5%, to 30 1/2 after
agreed to acquire the company last night for $194 million in stock. BancWest gave up 3 13/16, or 8.9%, to 39 3/16.
soared 4 3/4, or 44.2%, to 15 1/2 after
made an unsolicited $777 million bid for the chip concern. Philips lost 1/2 to 69 5/8.
Earnings/revenue reports and previews
jumped 1 3/8 to 30 13/16 after reporting fourth-quarter earnings of 14 cents a share, a penny ahead of the six-analyst forecast and above the year-ago loss of 1 cent.
sliced off 2 3/4, or 15.9%, to 14 1/2 after warning that, entering the final month of its fiscal fourth quarter, it still needs to earn more than 50% of the revenue needed to meet earnings expectations of 12 cents a share.
climbed 2 5/16, or 11.8%, to 21 7/8 after last night posting fourth-quarter earnings of 30 cents a share, in line with estimates.
sank 1 7/16, or 6.9%, to 19 3/8 despite last night reporting first-quarter earnings of 8 cents a share, in line with the seven-analyst forecast and above the year-ago 4 cents.
rose 2 1/4, or 7.3%, to 33 after posting fourth-quarter earnings of 26 cents a share, above the nine-analyst outlook for 25 cents and the year-ago 20 cents.
advanced 1 3/8, or 6.3%, to 23 3/16 after last night topping fourth-quarter earnings estimates by 1 cent a share with a profit of 22 cents.
Offerings and stock actions
lifted 15/16 to 29 7/8 after last night setting a 2-for-1 stock split.
tanked 2 3/16, or 7.3%, to 27 7/8 despite last night saying it filed with regulators for a 1.72 million-share offering.
popped up 1 1/4 to an all-time high of 76 11/16 after
Morgan Stanley Dean Witter
raised its price target to 90 from 80 a share.
scored 1 7/16 to 35 3/16 after
Salomon Smith Barney
raised it to buy from neutral.
initiated coverage of several credit card issuers:
Capital One Financial
rose 3 3/4 to 127 5/8 after being rated a strong buy; and
rose 5/8 to 108 1/2,
added 5/8 to 24 1/4 and
added 3 5/8 to 102 1/8 after the firm started the companies with a buy.
expanded 3/8 to 17 1/16,
expanded 1 1/2 to 38 1/2 and
lost 3/4 to 72 3/8 after the
American Stock Exchange
said the stocks will be added to TheStreet.com E-Commerce Index following the close of trading March 4. They replace
, which fell 11/16 to 27 7/16,
, which fell 1 1/2 to 19 3/4, and
Barnes & Noble
, which hopped up 7/8 to 29 5/8.
sloughed off 2 7/8 to 85 1/4 on worries the
Food and Drug Administration
won't approve the company's wearable blood sugar monitor for diabetics.
shot up 2 15/16, or 24%, to 15 3/8 after the
oft-off-the-mark Inside Wall Street column in
said there's speculation that
may expand its current 32% stake in NetSpeak or make an offer for the whole company. Motorola dropped 1 3/8 to 70 1/4.
tacked on 1 9/16 to 55 11/16 after saying it received the go-ahead from a European committee for approval of its
drug to treat hepatitis C. The committee also recommended approval for the company's
for the prevention of myocardial infraction in patients with acute coronary syndrome.
Virgin Express Holdings
swelled 5/8, or 5.8%, to 11 5/8 after saying it will vote April 13 on a $15 million repurchase plan.
gave up 1 to 41 1/16 after filing suit against
, alleging that Lilly unlawfully promoted its osteoporosis drug
for use in preventing breast cancer. Lilly advanced 1 1/4 to 94 1/2.