Today's Market: Hewlett-Packard's Earnings Miss Pushes Nasdaq Below 3000

<LI>Nasdaq hits lowest level in a year.</LI> <LI>H-P misses estimates by 10 cents a share.</LI>
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(Updated from 10:04 a.m. EST)

The

Nasdaq Composite Index has tumbled below the 3000 mark, its lowest level in more than a year.

It was shoved by some ugly earnings from computer-maker

Hewlett-Packard

(HWP)

, which this morning stung the market in a tender and sensitive place. H-P missed fourth-quarter earnings estimates by a full 10 cents, coming in with earnings of 41 cents per share. Hmmm. Only a month ago, the company had said it expected to meet earnings and revenue forecasts for the quarter.

It hadn't been scheduled to report its earnings until Wednesday.

No understatements here. This is a bad time for computer-makers. In the last month, several computer leaders have cut their earnings outlook for upcoming quarters, and the whole sector got punished for it. The latest of the bunch was

Dell

(DELL) - Get Report

, which Friday helped to knock the Nasdaq down 171.4, or 5.3% to 3028.9, the index's low for the year. The

Dow also fell on its face, losing 231.3, or 2.13%, to 10,602.95.

Hewlett-Packard was lately losing 13.1%. It wasn't alone.

The tech-heavy Nasdaq was off its lows, down 88 to 2941. The blue-chip

Dow was dropping 94 to 10,508. Hewlett-Packard is one of the 30 stocks that make up the Dow. The

S&P 500, which tracks the broader stock market -- because it is made up of the 500 largest companies -- was losing 15 to 1351.

"It's hard to paint any positive brush on the market," said Bryan Piskorowski, market analyst at

Prudential Securities

. "The Hewlett number was obviously not what we were looking for."

Investor concerns that the slowing economy is squeezing corporate pocketbooks and cutting into capital investment in computer and telecom equipment has put a major dent in the Nasdaq this quarter.

TheStreet.com

recently wrote about the outlook for

capital expenditures. We also looked at how an economic slowdown will impact a slowdown in

corporate earnings.

While Hewlett-Packard, in a press release of its earnings, said customer demand remains strong, investors want to hear what spin the company puts on its outlook for coming quarters during its conference call this morning. The PC-maker and imaging giant blamed "margin pressures, adverse currency effects, higher-than-expected expenses, and business mix" for the current quarter's earnings miss.

TheStreet.com

wrote about the

earnings announcement in more detail in another story.

But how much of this bad news has already been accounted for in the sector's stocks?

Warning after warning has hit computer-makers, beginning with

Apple

(AAPL) - Get Report

, and later,

Compaq

(CPQ)

. Of the leading PC-makers, only

Gateway

(GTW)

has said this quarter that it is comfortable with earnings estimates for next year. But there were more losses to be had this morning. The

Philadelphia Stock Exchange Computer Box Maker Index

, which tracks the stocks of companies that make the computers that sit on our desks, was lately off 3.5%.

In other H-P news, the company also said that it ended its quest for the consulting arm of

PricewaterhouseCoopers

.

If you want to catch the company's outlook for coming quarters yourself, look at a replay of the company's conference call here: http://www.hp.com/hpinfo/investor/quarters/2000/q4webcast.html.

Another battered sector, the semiconductor-equipment makers, is taking a slight hit today after

Credit Suisse First Boston

this morning lowered its price target on

Applied Materials

(AMAT) - Get Report

. CSFB analyst John Pitzer cut its forecasts for the company's 2001 earnings per share to $2.85 from $3.25 this morning, saying, "We become more worried about growth in the April quarter." CSFB said it may have a more bearish view of the current inventory correction than most, however.

The

Philadelphia Stock Exchange Semiconductor Index

that tracks chip companies was lately coming back a bit, up 0.95%. Applied Materials was lately down 1.5%.

Meanwhile, investors will continue to keep a keen eye on elections developments. Who's not watching? One of the latest actions to watch will be the Bush campaign's expected effort to present its case for an end to the manual recount of votes in Florida. The campaign is calling the recount unconstitutional.

Elsewhere in the news, OPEC decided over the weekend to put additional oil production increases in its member nations on hold. OPEC supplies the majority of the world's oil and its decisions have a major impact on oil prices.

Any Bright Spots?

Investors are flocking to defensives and bonds as they storm out of stocks.

The

Philadelphia Stock Exchange Forest & Paper Products Index

, for example, was gaining 4.2%.

"We could see some pockets of strength in the food sector by virtue of it being a defensive bid, and the merger and acquisition activity here. Drug stocks could also see some strength and we could get a smattering of buying in financials. But tech is out of favor," Piskorowski said.

"We are in washout stage, and in a bottoming process. We do have a slowing economy, slowing earnings growth. The market would be looking for a more accommodating Fed, and that's not going to be the case. We're not going to see it this week."

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Bonds/Economy

Bond prices were soaring this morning as investors scrambled out of stocks in search of a safe haven. The benchmark 10-year

Treasury note was up 8/32 to 99 29/32, yielding 5.763%.

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International

Telecom, media and tech stocks, as well as banks, were weighing on

European markets around midsession, and the major indices were steeped in negative territory.

As lunchtime approached across the Atlantic, the

FTSE 100

stood down 106.60 points at 6293.60.

Over on the continent, the

CAC-40

in Paris was 110.18 lower to 6037.31 and the

Xetra Dax

in Frankfurt was off 111.83 to 6739.86.

The beleaguered euro was lately trading at $0.8621. Recent efforts by the

European Central Bank

to prop up the currency have done little to give the single currency any kind of real jump-start.

Asian

equity markets skidded lower Monday, following Friday's ugly performance on Wall Street, as investors remained concerned about the uncertainty surrounding the U.S. presidential election.

In Tokyo, the

Nikkei 225

closed down 323.9 points, or 2.2%, at 14,664.6.

In Tokyo currency trading, the dollar traded up to 108.01 yen Friday. It was lately trading at 107.71 yen.

Hong Kong's

Hang Seng

index also ended in the red, falling 573.7, or 3.7%, to 14,815.7.389.4.

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