Just one day after the
Federal Reserve announced a change that favored a cut in interest rates, investors were having another in a series of prolonged brat attacks -- swatting down the values of the down-and-out technology sector as well as old-economy industries like heavy manufacturing, retail and shipping.
Blood has swept through a freshly snowed upon Wall Street, washing away any evidence of an early December run up. In fact, there was no more telling place to look at than the
American Stock Exchange Institutional Index
. Technically, this rarely mentioned index tracks the 76 stocks that are held in the highest dollar amounts in institutional portfolios valued at more than $100 million. But in broader, and more basic terms, this is what the institutions, the big guys, are buying.
Or rather, selling. Today, this index was off 2.4%, hitting a 52-week low of 719.53. And if that level sticks, this would mark the first time since Christmas 1998 that the index closed at this level. The index is off 24% since hitting a record high of 951.7 in March.
Against this backdrop of heavy institutional selling, the action-reaction cycle of company announcements about earnings problems and analyst downgrades continued. Today's biggest victims were
, which were all
downgraded to near-term neutral from accumulate at
The influential brokerage firm said it was very concerned about slowing corporate spending in technology. Corporate spending is the lifeblood of most technology companies. It's simply bad news for the entire industry, one that hasn't seen its share of good news in the wake of warnings from bellwether companies like
, Intel and
Last night, Cisco rival
warned about its earnings and put a nasty taste in Wall Street mouths, especially Merrill's Michael Ching. He said that Foundry's miss could be a harbinger of things to come over at Cisco. "Foundry's pre-announcement represents the first acknowledgement that capital spending issues are also impacting suppliers of next generation switching solutions," Ching wrote. "We estimate that next generation switching solutions represent about 20% of Cisco's revenues."
Foundry was off 55%. Yes, you read that correctly.
If you're a tech investors, welcome to hell on Earth. IBM and H-P both hit 52-week lows, while Intel hovered just pocket change away from one of its own lows. And so went the rest of technology, from the computer makers to the already destroyed dot-coms.
Just look at the number of record lows on the
Nasdaq Stock Market, which is a haven for all different kinds of new technology. More than 700 stocks hit 52-week-lows today, which would be impressive on its own even if the Nasdaq hadn't had more than 800 52-week-lows a couple of weeks ago. This means that already low stocks were limboing even lower.
Speaking of worse. The
Nasdaq Composite Index breaking below 2400 for the first time since the first week of June 1999. That's not just a 52-week-low -- that's an 81-week-low. The
Dow Jones Industrial Average wasn't doing any better, weighed down by Big Blue and broad weakness across the board. And 23 of the 30 blue-chips were in the red at midday, pulling the Dow to within 100 points of a 52-week-low of its own.
No single sector was gorier than the Internet. The
TheStreet.com Internet Sector Index
, known as the
DOT, dropped 9.2%, trading at a new 52-week-low. In fact, with so many of its components either valued below $10 a share or at 52-week-lows, the DOT looked like a post yard-sale front lawn, with picked over companies receiving another rummaging. Today, eight of the 24 companies in the DOT were worth less than ten bucks, with three more just cents away. Ten had 52-week-lows.
Someone get the gauze.
There were so many losers out there today that it was hard to tell if the tape was filled with the stocks of some of America's biggest companies or packed with 14-year-old boys trying desperately to grow moustaches in order to "impress" the girls in the mall food court.
Volume was heavy, too.
New York Stock Exchange: 945 advancers, 1797 decliners, 696.4 million shares. 108 new 52-week highs, 147 new lows.
Nasdaq Stock Market: 727 advancers, 3124 decliners, 1.4 billion shares. 35 new highs, 712 new lows.
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Most Active Stocks
NYSE Most Actives
- EMC (EMC) : 17.97 million shares.
America Online (AOL) : 17.96 million shares.
Lucent (LU) : 16.4 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 85.7 million shares.
Sun Microsystems (SUNW) - Get Report: 59.6 million shares.
Microsoft (MSFT) - Get Report: 38.9 million shares.
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Airlines and shippers were careening deep into red territory after shipper
raised the idea that fuel costs might be so high that not all companies can hedge against the rising tide. Sure, FedEx reported
second-quarter earnings per share that were in-line with analyst estimates, but its fuel expenses were $78 million higher than they were in the year-ago period, and that
the affects of hedging to lock in low prices.
As a result, any industry with fuel-related concerns was getting the shaft. The
American Stock Exchange Airline Index
fell 3.4%, while the
Dow Jones Transportation Average
So, where's all that money going? Well, where it went during much of November, when markets didn't like the uncertainty of the prolonged battled for the White House. It's going into those industries that will carry on even during an economic slowdown. Hell, you get really sick -- you go to the hospital. You want solid assets -- you buy gold. You lose a lot of money in Xerox -- you turn to drugs.
Philadelphia Stock Exchange Gold & Silver Index
gained 2.2%, while the
S&P Health Care Index
gained 1.3%. The
American Stock Exchange Pharmaceutical Index
was winning 1.7%.
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Treasury prices are sharply higher as investors worry that yesterday's decision by the Federal Reserve to leave interest rates unchanged will cause economic growth to slow further. That possibility is weighing on stock prices, which is helping to boost the bond market.
The benchmark 10-year
Treasury note lately was up 22/32 to 104 28/32, lowering its yield to 5.101%. Prices and yields move in the opposite direction.
Bond prices were rising despite signs of strength in the housing sector of the economy.
) rose more than expected in November to 1.562 million from 1.528 million in October. Economists polled by
had forecast a rate of 1.536 million.
In other economic news, the weekly
Mortgage Applications Survey
) detected an increase in refinancing and a decrease in new mortgage activity as mortgage interest rates fell to new lows for the year. The Refinancing Index rose to 777.2, the highest since May 1999. The Purchase Index fell to 302.2.
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European markets were taking a sizeable hit following the Fed's bias change and the disappointing end to yesterday's stateside trading. London's
fell 118.30 to 6176.70, while the Paris'
dropped 192.56 to 5766.30 and the German
fell 190.54 to 6288.74.
The euro last traded at $0.9051, while the yen was at 112.51. The euro has been gaining against the dollar in the face of a slowing U.S. economy.
Asian markets were devastated. Japan's
fell 217.94 to 13,914.43, not only falling through the psychologically pivotal 14,000 level, but hitting 22-month lows as well. Hong Kong's
dropped 257.32 to 14,930.72.
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