One week from the very hour that the Nasdaq Composite Index was marking the bottom of what turned out to be a 13.6% intraday decline, technology stocks once again found themselves plumbing the downside.
Near midday, the
Nasdaq Composite Index
was off a relatively modest -- relative to its recent swings, that is -- 37, or 0.9%, to 4151. The Comp had been down as much as 180 points earlier in the session, but bounced sharply off its nadir of 4009.52, a mere half-point above the intraday low it hit April 5. Poor performances by big-cap components
were keeping the Nasdaq under wraps.
As has been the recent trend, a number of blue-chips were catching bids amid the tech-sector pain. The
Dow Jones Industrial Average
was up 156, or 1.4%, to 11,343, buoyed by old-line stocks like
, meanwhile, was up 5, or 0.3%, to 1509.
The mood on trading desks has been far from panicky. But many observers seem to have resigned themselves to the notion that the Nasdaq won't be revisiting 5000 anytime soon.
"Whenever a market experiences a 20% drop, it changes the complexion of things," said Richard Cripps, chief market strategist at
in Baltimore. "In 1998, the complexion clearly changed to all tech, which has been the market's driver until this past March. I think this correction marks the peak in terms of tech's weighting in the S&P 500."
The Nasdaq closed yesterday 17% below its March 10 high. This time a week ago, it was down nearly 28% from that high.
A lot of the latest iteration of tech selling can be traced to
. That stock had already gotten a lukewarm reception to its in-line first-quarter
earnings report when it warned that it expected its second-quarter results to come in below expectations. That news sent Motorola into a tailspin, which spread throughout the semiconductor sector.
Motorola was lately down 25 13/16, or 17.1%, to 125 3/16. The
Philadelphia Stock Exchange Semiconductor Index
had recovered down much of its early losses, though. It was lately down 13, or 1.1%, to 1155, up from an intraday low of 1093.25.
, a volatile issue that has been moving to its own rhythm recently, was down 5 1/16, or 1.9%, to 257 15/16.
Moves like that are a little nerve-wracking to those who've bought in at tech's top. "They should be a little nervous," said Peter Boockvar, equity strategist at
, of the late-coming retail investor. "Motorola was at 180. It could be many, many years before this thing sees 180 again. I wouldn't necessarily puke it out down here, but people have to be careful about what they pay for things."
Unfortunately, the arrival of earnings season has done little to assuage fears over valuation so far. Embedded expectations for earnings are so high right now that even the slightest misstep is causing immense pain in the market's momentum favorites.
, for its part, was lately down a whopping 11 13/16, or 18.2%, to 53 3/16 after the company missed estimates by 2 cents
Judging by the continued rotation into cyclicals, that sort of damage is likely making more than a few individual investors take a second look at their asset allocation. "The broad public has embraced venture capital-like risk over the last five to six years without knowing it," said Michael Clark, managing director head of equity trading at
Credit Suisse First Boston
. "It's fine for firms equipped to judge those risks to be taking them. But the average person doesn't do nearly enough homework."
The market's cyclical proxies were telling a tale of Old Economy strength. The
Morgan Stanley Cyclical Index
was up 1.7%, while the
Philadelphia Stock Exchange Forest & Paper Product Index
was 3.4% higher. The
S&P Chemicals Index
, meanwhile, was up 3.7%.
Integrated oil stocks were moving higher, helped by a modest rebound in crude oil. Gains in
were helping the
American Stock Exchange Oil & Gas Index
Meanwhile, service stocks like
were sending the
Philadelphia Stock Exchange Oil Service Index
Small-caps and Net stocks were on the downside. The
was down 2, or 0.4%, to 516, while the
TheStreet.com Internet Sector
index was off 11, or 1.1%, to 949.
The bond market was experiencing a rare bout of weakness, with the benchmark 10-year Treasury down 25/32 to 104 19/32, putting its yield at 5.88%. The 30-year Treasury, meanwhile, was 1 23/32 lower to 106 20/32 and yielding 5.78%.
Breadth was mixed on moderate volume.
New York Stock Exchange:
1,475 advancers, 1,372 decliners, 611 million shares. 29 new 52-week highs, 28 new lows.
Nasdaq Stock Market:
1,221 advancers, 2,778 decliners, 1 billion shares. 13 new highs, 99 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.