Major indices just couldn't get along today. Blue-chips and technology stocks journeyed in opposite directions this morning, briefly came together and eventually went their
separate ways again.
The action resembled a 180 degree turn as the
Dow Jones Industrial Average ended the day up 37.74, or 0.3%, to 11,233.23 after being down about 80 points in morning trading. The tech-laden
Nasdaq lost 46.87, or 1.2%, to 3,849.48 after being higher by more than 60 points during the session. The Comp has now shed a little over 8% since the beginning of the month.
"There is nervousness ahead of third-quarter earnings and concerns about the currency translations for multinationals," said Jim Herrick, managing director of trading at
Robert W. Baird
in Milwaukee. "And there is concern that with oil at $34 to $35 a barrel, it will drag on earning. Originally the thinking was that tech would immune to any oil shock," but now people are starting to rethink that, he said.
Still, Herrick tries to keep the latest downdraft in perspective. "Throughout this whole rally we had dips. This is just another classic example of that. These
tech stocks are cyclical and volatile and periodically you are going to see dips. I wouldn't say this rally is over by any means."
But, at least a few sectors were feeling like the fun is over, namely the semiconductor stocks. The
Philadelphia Stock Exchange Semiconductor Index
slid another 4% today, bringing its dip for the month to a painful 14%.
Advanced Micro Devices
, which supplies hardware and software to the semiconductor industry didn't inspire any confidence with a warning last night that its fourth-quarter results would miss analyst estimates. Today,
Morgan Stanley Dean Witter
downgraded PRI, while
Credit Suisse First Boston
cut 2001 EPS views on the stock. The stock was slammed 16.81, or 39.4%, to $25.88
Indeed, companies with not-so-stellar earnings forecasts found investors were in no mood to hear about it. Among other stocks taken to the cleaners today were
, which fell 16.4%, and
Leggett & Platt
which lost 15.8%. Both stocks warned of lower results in the coming quarter.
Then again, good news didn't seem to be a guarantee of anything either. Check out sunglass and sportswear accessory maker
, which said yesterday it would beat third-quarter earnings and post a hefty gain in net sales. After a pop in after-hours trading last night, the stock lost 4% after earlier being down as much as 12.7% today. So much for fun in the sun.
The market is "kind of individually issue-driven today, there is not a heck of a lot of direction," said Jack Ablin, managing director of
Colonial Asset Management
in Jacksonville, Fla.. Noting another jump in
, up 9% today, and chatter about a missed banking conference, Ablin, said "it sounds like a deal is going to happen."
Asked whether he is concerned about the possibility of a so-called hard landing, or whether inflation can be reined in without hurting corporate profitability, Ablin noted recent reports that government spending is projected to rise 5% between now and next year.
"We're looking at an economy that is growing between 3% and 5%. That
spending will add a lot of cushion to the landing. That should prevent a hard landing," said Ablin.
Ablin said his firm is continuing to concentrate on some beaten-down and out-of-favor stocks at the moment including
S&P 500 lost 7.27, or 0.5%, to 1,481.99 while the
Russell 2000 slipped 1.19, or 0.2%, to 532.43.
TheStreet.com Internet Sector
index lost 4.94, or 0.6%, to 793.30.
Breadth was mixed on moderate light volume.
New York Stock Exchange: 1,366 advancers, 1,402 decliners, 981 million shares. 185 new 52-week highs, 54 new lows.
Nasdaq Stock Market: 1,792 advancers, 2,218 decliners, 1.567 billion shares. 93 new highs, 73 new lows.
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Most Active Stocks
NYSE Most Actives
- Lucent (LU) : 42 million shares.
Nortel Networks (NT) : 30.9 million shares.
AT&T (T) - Get AT&T Inc. Report: 14.8 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Cisco Systems, Inc. Report: 74.8 million shares.
WorldCom (WCOM) : 39.3 million shares.
JDS Uniphase (JDSU) : 32.4 million shares.
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Dow Jones Utility Average
stepped back 0.37 to 395.26. Spiking energy prices shot
to another all-time high of $84.94, while
topped to $56.75, before closing at $56.19.
American Stock Exchange Oil & Gas Index
jumped to a new all-time high of 548.79 before falling 0.2%, to 543.55. Yesterday, oil stocks soared following OPEC's decision to raise output by 800,000 barrels per day. The increase wasn't enough to drive down the price of oil, which hit $35.85 a barrel and has been bumping up against 10-year highs for most of the day.
Philadelphia Stock Exchange Oil Service Index
also hit a new high of 143.98, before tapering off 0.1%. Due to the high price of oil, companies are increasing their capital spending budgets in order to extract more oil, giving oil services companies even more business.
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Treasuries are narrowly mixed on little news. With no major economic releases on the calendar, bond traders are keeping an eye on oil, which is lower so far, and on the corporate bond calendar, which is unusually heavy. Heavy corporate bond issuance can put pressure on Treasury prices.
A couple of
governors have piped up at the
National Association for Business Economics
conference underway in Chicago, but their comments largely cancel each other out.
, president of the
, in an interview in today's
Wall Street Journal
, raised the specter of interest-rate cuts, assuming that energy prices peak and the inflation rate declines.
in comments to reporters this morning said the risk of too-high inflation is still greater than the risk of too-slow growth. Neither McTeer nor Moskow is a voting member of the
Federal Open Market Committee this year.
The benchmark 10-year Treasury note lately was down 4/32 at 99 23/32, lifting its yield to 5.789%.
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European markets headed into the close mixed, as they tried to catch up with yesterday's Nasdaq selloff.
ended 26.50 lower to 6555.50.
Across the channel, the
in Paris was finished up 22.79 to 6697.80, and the
in Frankfurt was still off 71.43 to 7143.02.
The euro was lately trading lower at $0.8615.
recently wrote a separate piece looking at the
Asian markets added to their Monday losses overnight.
Tokyo traders cautioned that it has room to fall as investors hurry to book profits before their fiscal first-half books close at the end of September. The
index shed 90.67 to close at 16,040.23.
The greenback barely budged against the yen in Tokyo trading to 106.21. The dollar was lately trading at 106.28 yen.
index fell 378.20, or 2.2%, to close at 16,629.78 as investors opted to close out positions before a public holiday Wednesday. Index heavyweights got pummeled, including
Pacific Century Cyberworks
, down HK$0.50, or 4.0%, to 12.15 ($1.56) and
down 1, or 1.7%, to 58.
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