Might as well break out the Lowenbrau now -- 'cause it might not get any better than this.
Nasdaq Composite Index
is eroding by the hour, led by steadily weakening big-cap technology stocks, including
, which reports first-quarter earnings after the close. The Comp lately was down 91, or 2.5%, to 3579.
Dow Jones Industrial Average was weakening, too, after a morning when a few weak stocks and a few pockets of strength wrestled the average to a veritable stalemate. Lately the Dow was off 31 to 10,572, while the
S&P 500 lost 13, or 0.9%, to 1411.
Internals on both markets are decidedly negative on another day without any support from buyers, as just 838 million shares have traded on the
Nasdaq Stock Market
, and only 546 million on the
New York Stock Exchange.
A familiar and frustrating pattern held form this morning, as the Comp started fast, attempting to regain some of the ground lost yesterday on a
article questioning Cisco's valuation. Now, strategists and analysts have been arguing for months that Cisco is overvalued, but until a couple months ago, they'd just been whistling Dixie.
But with Cisco's earnings due after today's close, and the bearish sentiment that continues to dominate among technology stocks, the article's timing was prescient, and accurate or not, it served to hold back some who felt ready to jump into the breach. Cisco, after losing nearly 5 points yesterday, was actually holding in there, lately down just 15/16 to 61 15/16 on 40.2 million shares, making it the Nasdaq's most active.
'A Reality Check on Triple-Digit P/Es'
"I don't know that the earnings per se on Cisco is the event that keeps buyers away, but there's clearly a reality check on triple-digit P/E ratios," said Richard Cripps, chief market strategist at
in Baltimore. "At the margin it's keeping buyers from buying the stock. If you're in an environment that's losing momentum, you get the natural selling pressure, and the buyers can only take so much."
That sentiment has spread to other technology stocks, especially big-cap names in the deep end of the swimming pool, where lots of investors like splashing about. That includes the likes of
, which bounced more than a point in the early going before fading, lately down 3 3/4 to 81 5/8; and
, which was down 1/4 to 72 1/16.
Morgan Stanley High-Tech 35
was down 2.5%.
Biotechnology stocks were among the trod upon, with
down 5.4% and
losing 9.9%. The
American Stock Exchange Biotechnology Index
lately was down 2.9%.
TheStreet.com Internet Sector
index was off 17, or 2%, to 847, while the
Russell 2000 was off 9, or 1.9%, to 491.
"Tech stocks are trying to battle against the current of a down market, which is overwhelming any positive fundamentals," said Cieran O'Kelly, trader at
Salomon Smith Barney
But some reckon that it's those fundamentals keeping volume at a trickle and the conviction among investors on soft ground. With P/E ratios still historically high and the investors viewing the market through the lens of rising inflation and a potential slowing of economic growth, dip buying remains perilous.
Hesistant to Put Money to Work
"People are hesitant to get back into the market," said Phil Ruffat, vice president at
. "People are being paid to put money to work and not manage cash ... but funds are sitting in cash, and they're being selective coming into the market."
Where they're coming back, they're being prudent. Today's strong sectors are few, basically retailers and a few others. Dow component
reported first-quarter earnings of 30 cents per share, exceeding
First Call/Thomson Financial's
consensus expectations for 29 cents a share. The stock gained 1/2 to 52 7/8 and was leading the way for some other retailers.
was strong today, gaining 1.7%, but the
S&P Retail Index
was up just 0.05%. Dow component
was the NYSE's most active, gaining 3/8 to 37 1/2 on 19.8 million shares.
Other strong movers on the New York Stock Exchange included
, up 4.1%, and Dow component
, up 4.6%. Financials shed their former strength: The
American Stock Exchange Broker/Dealer Index
was down 0.2%, and the
Philadelphia Stock Exchange KBW/Bank Index
was up 0.1%.
Traders still expect volume to pick up after the
Federal Reserve's May 16
Federal Open Market Committee meeting, but how the market reacts depends mightily on how aggressive the Fed is. The market, as evidenced by the fed funds futures traded on the
Chicago Board of Trade
, is expecting a 50-basis-point hike in the
fed funds rate. That would bring the rate to 6.5%, and again it seems some traders are starting to proclaim this "the last one," for whatever reason -- the presidential election, the psychological impact of a 50-point hike, the tides, etc.
The supine market's neuroses -- waiting for the Fed, waiting for economic data -- provoked Ruffat to quip that "we're kind of acting like the bond market."
Breadth was negative on light volume.
New York Stock Exchange
: 1,152 advancers, 1,596 decliners, 546 million shares. 38 new highs, 50 new lows.
Nasdaq Stock Market
: 1,267 advancers, 2,580 decliners, 838 million shares. 25 new highs, 69 new lows.
For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.