talked about mending fences in his concession speech ending the five-week old post election.
George W. Bush
, the soon-to-be 43rd President, followed with a speech of his own, about finding common ground.
Today, markets weren't in need of mended fences or common ground. They were in need of a bandage to staunch the heavy flow of blood that swept down Wall Street. Markets were overwhelmingly negative today as markets focused on the upcoming earnings season, which looks bad for not only the semiconductors and boxmakers, but for consumer goods, retailers and financials.
With the next president determined and Congress sure to be deadlocked, the financial picture snapped into focus for investors, who didn't like what they saw from
These two have been joined at the hip ever since agreeing to combine into one company back in September. And today, the
Dow's bankers and brokers sank after the pair announced that fourth-quarter earnings would come in way below expectations. Total revenue will be lower than the year-ago quarter and the previous quarter this year, due to a challenging market, including low volume on currency markets.
Five-thousand employees will be jettisoned to help cut duplication related to the merger, which leaves a particularly bad taste in mouths just as those year-end bonuses are set to be doled out.
But perhaps most disturbing was the bottom line at
Chase Capital Partners
. (Which has a stake in
.) The venture capital unit of Chase Manhattan has losses of $300 million on its books, which means that its investments in both the stock market and in bringing companies public were far lower than had been anticipated.
This news, coupled with the news of the earnings miss, hurt both the banking and brokerage houses. The
American Stock Exchange Securities Broker/Dealer Index
slid 4.7%, giving back a lot of the gains that it had made in the beginning of December. This is the third-straight day of losses for the brokers. The
Philadelphia Stock Exchange/KBW Bank Index
slid 2.3% after trading relatively flat over the past two sessions.
As should be expected, both J.P. Morgan and Chase were reeling from the news. After tacking on 22% in December gains as of yesterday's close, Morgan was beaten down 3.8% to $157.94. Chase fell 3.7% to $42.88.
It was nearly impossible to escape the ghost of economic future. Appliance makers dropped following yesterday's earnings warning by
and today's warning from rival
is one such appliance maker, with its Hotpoint line. It was another drag on the Dow, falling 3% to $51.56.
Nasdaq Composite Index was off 94 to 2729, as those darned technology stocks took a nosedive ahead of some big name earnings releases this evening.
But first, the good news.
The $109 billion mega merger between
got the green light to go ahead from the
United States Federal Trade Commission
, who voted unanimously to approve the largest deal in American history. The road to an AOL-TWX merger isn't totally complete, since both have to face off with the
Federal Communications Commission
, but the biggest stumbling block is now in the rearview.
Both companies traded much higher on the news, with Warner up 2.6% to $74.50, and AOL up 3.2% to $50.
And now the bad.
Quite a sizable chunk of technology was making a beeline to the toilet. Telecommunications stocks, disk drive peripherals and networkers were all much lower, but the dot coms were the most disappointing, shrugging off the AOL gain and focusing on its own problems, namely, the slowing amount of money given to Internet companies and the pall of death hanging over the industry as last year's Super Bowl advertisers have become this week's toe-tag model.
were lower, while the
TheStreet.com Internet Sector Index
, or DOT, dropped 4.6%.
Tonight, DOT member
will release earnings after the bell, along with
rival and Unix-supporter
But all eyes are on one company --
. Larry Ellison's software giant will release earnings after the closing bell today and ahead of that, it was trading relatively flat.
Losers dominated trading while buyers weren't willing to go play in traffic. Volume was pretty thin.
New York Stock Exchange: 1,184 advancers, 1,695 decliners, 1.05 billion shares. 93 new 52-week highs, 70 new lows.
Nasdaq Stock Market: 1,216 advancers, 2,639 decliners, 1.732 billion shares. 37 new highs, 218 new lows.
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Most Active Stocks
NYSE Most Actives
- Nortel (NT) : 26.3 million shares.
Lucent (LU) : 24.5 million shares.
EMC (EMC) : 18.3 million shares.
Nasdaq Most Actives
- Sun Microsystems (SUNW) - Get Report: 77.5 million shares.
Cisco (CSCO) - Get Report: 44.9 million shares.
Oracle: 42.9 million shares.
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There was a tremendous amount of red on the tape overall, with many sectors sliding as those fears of an economic slowdown creep out of technology and into the lifeblood of other sectors. Retail has already felt the affect, as speculation continues that those clogged sales racks will cut into the profits of many a mall outlet. After taking a hit yesterday after a market-wide rally, the
S&P Retail Index
was relatively flat today, trading to the downside.
Transports were also hurt, especially after
, the parent company of shipper
, said it would beat second-quarter estimates by three cents a share, but that the future wasn't quite as peachy. FedEx warned that 2001 could be a rough year, with the slowing American economy and horrible weather cutting into profits. And that makes sense, since fuel costs are still quite high, taking on additional costs due to weather-delayed shipments could impact not only FedEx, but also the entire transportation industry.
As a result, the
Dow Jones Transportation Average
fell 3.8%. FDX slipped 9.3% to $41.97, while rival
dropped 6.3% to $58.69.
Petroleum-related stocks were easing, with the recently hot natural gassers coughing up a lot of their gains. The
American Stock Exchange Natural Gas Index
fell 2.9%. Nearly every inch of the petroleum world was weaker, with the
American Stock Exchange Oil Index
slipping 3.4%, and the
Philadelphia Stock Exchange Oil Service Index
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Bond prices were higher after a report showed little change in goods prices at the wholesale level, suggesting that inflation will remain under control.
The benchmark 10-year
Treasury note was up 7/32 at 103 29/32, dropping its yield to 5.229%.
Producer Price Index
), which measures prices paid by businesses for goods, rose 0.1% in November, in line with the average forecast of economists polled by
. The annual rate of increase of producer prices held steady at 3.6%.
The core PPI, which excludes food and energy prices, were unchanged. Their annual rate also held steady, at 1%.
In other economic news, first-time claims for unemployment insurance fell for the second week in a row, indicating increasing demand for workers. Bond investors would rather see slackening demand, which would signal economic weakness.
initial jobless claims
) fell to 320,000, the lowest in six weeks, from 352,000. The four-week average fell to 343,250 from last week's 28-month high of 345,250.
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Europe can be lovely this time of year despite the cold, especially in Mediterranean areas, which can be rather mild. But that's the weather. The European stock indices were not as lovely, nor as hopeful.
was bloody awful today, dropping 139.2 to 6263.8, as technology issues took a curb stomping. The Paris'
dropped 56.64 to 5905.65, while Germany's
coughed up 150.26 to 6469.95.
The euro was rising again after coming off last week's 11-week high yesterday. It was lately trading at $0.8882. It has been gaining in the past few weeks as the U.S. dollar weakens in the face of a slowing domestic economy.
Asian markets stumbled overnight on the Nasdaq's three-digit decline yesterday. In Japan, the
fell 241.49 to 14927.19. Hong Kong's
closed 124.74 lower to 15,496.99 on weakness in property shares.
The greenback was higher against the yen to 112.34 yen.
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