Updated from 4:12 p.m. EDT
It might be TGIF time, but Wall Street wasn't celebrating today's closing numbers. The major market indices sank deep into the red during today's session, as investors cashed in on gains in the wake of two tech giants' shortcomings.
The selling pressure intensified by the 4 o'clock bell. The major measures pushed further into negative territory, with the
Nasdaq Composite Index finishing down 90.11, or 2.1%, to 4094.45. The
Dow Jones Industrial Average ended down 110.31, or 1%, to 10,733.56. The
Russell 2000 sank 12.05, or 2.3%, to 522.70, while the broader
S&P 500 slipped 15.38, or 1%, to 1480.19.
One beleaguered Net name zoomed, yet it failed to reach 2.
closed up 9/16, or 54.5%, to 1 19/32, on news that privately held health-care news company
offered to merge with it for an undisclosed amount.
Thursday's euphoria over solid earnings reports and a stable interest-rate outlook seemed like a distant memory as nasty earnings warnings from tech firm
and Swedish telecom group
roiled the market.
spinoff, dropped 10.2% after warning that its third-quarter earnings would come in at 18 cents to 22 cents a share, well short of the 35-cent forecast by analysts surveyed by
First Call/Thomson Financial
H-P, which fell 5%, came under pressure from
warning that third-quarter profits would likely fall short of forecasts because of slack demand for its more-expensive printers.
Ericsson's component-shortage problems in its handset division, which will hinder its second half, bashed the stock down 12.2% and weighed heavily on other telecom shares.
slipped 2.9% and
Nasdaq Telecom Index
was off 2%.
"It is not unusual to see profit-taking in the sectors that have done well," said John Bartlett, director of economic and market strategy at
in St. Louis. "There is still a high level of uncertainty, and earnings warnings only make people more nervous."
On the bright side, "we have had a great earnings season," said Dan Ament, associate vice president and investment executive at
in Minneapolis. Ament points out that a strong 55% of the S&P 500 companies have beat expectations, adding that 8% have missed and the remainder have met expectations.
But at least for today, investors were looking elsewhere for clues to the market. Even strength in tech bellwether
following good and revenues and earnings reports couldn't boost the market's mood.
Semiconductor Stocks Blasted
Semiconductor stocks were got nailed, with the
Philadelphia Stock Exchange Semiconductor Index
down a painful 5.5%.
, just to name a couple, each were getting whacked more than 6%.
And although the losses look big on the charts, some market mavens, such as Brian Gilmartin, portfolio manager at
Trinity Asset Management
, do not see anything fundamentally wrong with the sector. "We had a lot of good news built into the sector and a very strong June," he said. "I think that they'll tread water for another month or so, but I think that the correction is natural."
But the drug sector, which started the day on a down note, perked up, with the
American Stock Exchange Pharmaceutical Index
buzzing up 0.7%.
Johnson & Johnson
traded strongly throughout the afternoon but did slack off a bit toward the close.
"When money comes out of tech, it looks for safety, so you see some of those stocks benefit," said Robert Harrington, co-head of block trading at
. "The stocks have been under pressure and I think that people are just starting to take another look" at the sector.
DOT's Mauled, Folks
TheStreet.com Internet Sector
DOT, plunged 36.35, or 4.2%, to 828.80. E-commerce software firm
, which makes Internet search and traffic-control technology, both posted heavy losses.
Alan Greenspan cleared the air a little Thursday morning with some modestly friendly words on inflation, the market was freed to center its attention on earnings. For two straight days before the testimony, jitters over Greenspan's words had sent investors on a selling spree, and even good earnings news became bad news.
The Fed king's semiannual
Humphrey-Hawkins testimony on the state of the economy before
indicated that if signs of economic slowdown continue, the Fed likely won't raise interest rates when it next meets, Aug. 22.
In other market news,
beat estimates with a loss of 74 cents a share vs. the consensus estimate of an 80-cent loss. But analysts weren't impressed after blow-away numbers from fellow B2Bers
reported earnings in line with estimates, but more importantly, it said it was on track for 6% to 7% sales growth for the full year.
Salomon Smith Barney
recently lowered its rating on the company to outperform from buy on concerns that possible drops in film prices could hurt earnings in the second half of this year and early 2001.
was up 4.2% on news that it will replace its former mother company
in the S&P 500 index.
For the week, the Dow lost 0.7%, the Nasdaq Composite fell 3.6%, the S&P 500 slipped 2% and the Russell 2000 rose 3.6%. The
Dow Jones Transportation Average
fell 0.3%, the
Dow Jones Utility Average
gained 1.2% and the
American Stock Exchange Composite Index
stumbled 1.6%. TheStreet.com Internet Sector index skidded 4.1% in the latest week, its last with 20 stocks. (As
reported earlier in the week, the DOT will grow to 24 stocks as of Monday's open.)
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Breadth was negative on moderate volume today.
New York Stock Exchange: 1,089 advancers, 1,773 decliners, 967.8 million shares. 71 new 52-week highs, 44 new lows.
Nasdaq Stock Market: 1,320 advancers, 2,602 decliners, 1.517 billion shares. 70 new highs, 77 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 39.8 million shares.
Agilent: 26 million shares.
AT&T (T) - Get Report: 25.8 million shares.
Nasdaq Most Actives
- Ericsson: 89.4 million shares.
JDS Uniphase (JDSU) : 63.2 million shares.
Sun Microsystems (SUNW) - Get Report: 39.7 million shares.
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Financials were weak after getting a lift through midmorning from Greenspan's soothing words on the state of the economy yesterday during his testimony before Congress. The
Philadelphia Stock Exchange/KBW Bank Index
ended down 0.8%.
But the brokers turned positive, with the
American Stock Exchange Broker/Dealer Index
up 0.8% after rising 2.6% to 566 yesterday.
Morgan Stanley Dean Witter's
3.7% gain made a valuable contribution to the index.
The oil sector was far from energized today, with the
American Stock Exchange Oil & Gas Index
losing almost 2.1%. According to
, crude oil futures fell on signals that the Saudi Arabia would boost output, which would put a damper on the price of oil. Dow component
slid 1 1/16 to 77 1/16, while
Philadelphia Stock Exchange Oil Service Index
was also lost ground, down almost 3.9%.
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Treasuries gained a bit of ground on very light summer-Friday volume, adding to and confirming
Thursday's massive gains, which were triggered by Greenspan's aforementioned Humphrey-Hawkins testimony.
There was no major economic news, but large gains by the dollar against the yen and a falloff in oil prices gave the session a bullish backdrop.
The benchmark 10-year Treasury note ended up 2/32 at 103 18/32, dropping its yield 1.1 basis points to 6.002%.
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European markets tanked along with the U.S. markets, originally pressured by Ericsson's earnings warning.
lost 90.6, or 1.4%, to 6378.4.
Across the channel, Frankfurt's
was down 86.19, or 1.2%, to 7393.95 and the Paris
dropped 99.65, or 1.5%, to 6464.12.
The euro was lately trading at $0.9372.
Asian markets were mixed overnight.
Back from a one-day holiday, the Tokyo market was hit by weakness in Japanese electronics-makers, a week before their first-quarter earnings results are released. The market was already depressed about recent corporate failures. The
index shed 172.08, or 1%, to close at 16,811.49,
With dealers worried about the long-term economic scenario in Japan due to bankruptcy fears, the greenback edged higher against the yen in Tokyo trading to 108.54. The dollar was recently trading at 108.75 yen.