Today's Market: Broad Tech Meltdown Sends Nasdaq Below 2900

The Dow has also had its troubles, and was recently near its session lows.

Author:
Diane Hess
Publish date:
Nov 20, 2000 1:03 PM EST

Wall Street analysts knocked the stuffing out of technology stocks this morning, casting a pall over the entire sector today. Halfway through the trading day, the Nasdaq Composite Index was near its session lows and just underneath the 2900 mark.

This morning,

Morgan Stanley Dean Witter

took a swing at the networking sector pinata with downgrades on

Cisco

(CSCO) - Get Cisco Systems Inc. Report

Juniper Networks

(JNPR) - Get Juniper Networks Inc. Report

and

Redback Networks

(RBAK)

MSDW cut its price target on Cisco -- which was lately off 4.7% to $50.25 -- to $75 from $90. It downgraded its ratings on Juniper -- lower 18% to $126.56 -- and Redback -- behind 10.5% to $72.25 -- to outperform from strong buy. The investment house decreased its 12-month price target on Juniper to $200, down from $275, and on Redback to $115 from $150.

"The networking stocks' downgrade has made today's market very volatile," said Rob Cohen, head of listed trading at

Credit Suisse First Boston

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. "That sector was a holdout for growth at any cost. But people are no longer comfortable with that mindset."

Companies that outfit the networkers with fiber-optic components saw their value dim today, as a result of the MSDW action. Shares of

Ciena

(CIEN) - Get Ciena Corporation Report

fell 9.5%, while

Sycamore Networks

(SCMR)

lost 7.3%.

PMC-Sierra

(PMCS)

staggered 1.8% and

TranSwitch

(TXCC)

declined 14%.

Shares of

Oracle

(ORCL) - Get Oracle Corporation Report

, a leading manufacturer of enterprise software, had recently tanked 13% to $25, on news its bloom has fallen from the rose.

Friday evening, the company announced that Executive Vice President Gary Bloom is leaving to become CEO of

Veritas

(VRTS) - Get Virtus Investment Partners Inc. Report

. There was much speculation that Bloom might have been in line to succeed CEO Larry Ellison.

Earlier today, Edward Kerschner, chief global strategist for

UBS Warburg

and

PaineWebber

removed Oracle from his "highlighted stocks" list and downgraded Oracle to hold from buy.

Wit SoundView

sliced its recommendations on

Dell

(DELL) - Get Dell Technologies Inc. Class C Report

Gateway

(GTW)

, and

Intel

(INTC) - Get Intel Corporation Report

. The firm cut Dell, down 7% to $23.19, to buy from strong buy; Gateway, behind 9.4% to $35.99, to hold from buy; and Intel, off 0.7% to $41.25, to buy from strong buy.

At last look, the

Philadelphia Stock Exchange Computer Box Maker Index

had fallen 3.9%, while the

Philadelphia Stock Exchange Semiconductor Index

had decreased 2.7%.

Other fatalities this morning included online auction house

eBay

(EBAY) - Get eBay Inc. Report

, which was down 20% to $34.75.

Lehman Brothers

dropped eBay to a netural from a buy this morning. The firm's influential analyst, Holly Becker, wrote that she is concerned that eBay's core business is slowing. She also said that the company's aggressive 2005 sales projections may cost more money and require more time than eBay had projected. Last month, eBay reported strong third-quarter earnings and was upbeat about its outlook for coming quarters -- quite an anomaly in the Internet world. But the company's stock hasn't really benefited from it.

Blue-chip stocks have not been immune to the cold winds on Wall Street.

Salomon Smith Barney

cut its rating on soda giant

Coca-Cola

(KO) - Get Coca-Cola Company (The) Report

to outperform from buy, based on added uncertainty surrounding a potential bid to buy

Quaker Oats

(OAT)

. Coke dropped 6.3% to $57.56 in recent action.

Other Dow losers this afternoon include

J.P. Morgan

(JPM) - Get JP Morgan Chase & Co. Report

, down 2.9% to $141.94, and Microsoft, off 4.1% to $66.19.

Playing Politics

Making matters worse today is the continuing political stalemate. "People are reluctant to do anything because of the presidential election," said Bryan Piskorowski, market analyst at

Prudential Securities

. "They're waiting for an announcement and they don't even know when it will come."

Looking at the big picture,

Lehman Brothers

strategist Jeffrey Applegate, this morning, issued a conservative earnings forecast for the

S&P 500. Applegate, who remains bullish on the index's future performance, said his earnings growth estimates were a little too optimistic.

The strategist cut his third-quarter S&P earnings per share growth to 10% from 13%, but maintained his 2001 price-target of 1800 on the S&P. He wrote that Treasuries will continue to perform well and moved his 20% allocation of cash into bonds.

Market Internals

Breadth was negative on moderate volume.

New York Stock Exchange: 853 advancers, 1,822 decliners, 484 million shares. 47 new 52-week highs, 89 new lows.

Nasdaq Stock Market: 756 advancers, 2,936 decliners, 866 million shares. 11 new highs, 268 new lows.

Most Active Stocks

NYSE Most Actives

Nortel

(NT)

AT&T

(T) - Get AT&T Inc. Report

General Electric

(GE) - Get General Electric Company Report

Nasdaq Most Actives

WorldCom

(WCOM)

Sector Watch

TheStreet.com Internet Sector

had recently dropped 6.5%. Every component in the index was down, with much of the pressure coming from eBay.

Yahoo!

(YHOO)

was down 4.6% to $48.88 after a French court ordered the site to bar French users from sites selling Nazi memorabilia. Although its French portal doesn't have auctions of such memorabilia, users can easily click to English-language services that do. Yahoo! fought the case, saying its services are governed under the U.S. Constitution and cannot bar Nazi-related material.

Investors have taken shelter today in oil and energy stocks. The

American Stock Exchange Natural Gas Index

was lately up 0.4% and the

American Stock Exchange Oil & Gas Index

had recently gained 0.3%.

Money was also moving from tech and banks to a typical safehaven: gold. The

Philadelphia Stock Exchange Gold and Silver Index

was up 1.6%.

Bonds/Economy

Bond prices were rallying this morning after they fell Friday. The benchmark 10-year

Treasury note was up 9/32 at 100 19/32, yielding 5.671%.

Bond prices fell Friday with long-maturity issues falling for the first trading session in five sessions, in what market-watchers said was partly a response to the prospect of a

George W. Bush

presidency and partly just profit-taking.