Skip to main content

Today's Market: Stocks End Dreadful Session Off Lows; Nasdaq Closes Below 2600

Since hitting its high-water mark in March, the Comp has lost over half its value.
  • Author:
  • Publish date:

It's over. It's all over.

You can breathe now.

Today was a scary day on Wall Street, as investors exorcized massive amounts of value from technology stocks in the wake of last night's warnings from





(ALTR) - Get Altair Engineering Inc. Class A Report

. Stocks got beaten like Gerry Cooney, spilling red all over the place, making a total mess of things.


Dow Jones Industrial Average

, fell 215 to 10,414, a 2% pullback. But the real violence broke out on the

Nasdaq Composite Index

. The Comp dropped 109 to 2598, closing below 2600 for the first time since August 12, 1999, erasing more than a year's worth of gains.

Hard to believe that the Comp hit 5132 just nine months ago. Since then, the Comp has been just about cut in half. And in the month of November, the Comp has fallen 25%. That's a lot of money in a short time.

Today's telling stat: There were 853 new 52-week-lows on the

TheStreet Recommends

Nasdaq Stock Market. That's a phenomenal number of new lows, pointing that a sizeable chunk of companies are trading at or near the bottom of their trading ranges.

Image placeholder title

Within the blue-chips, 21 of the 30 industrials were in the red, with broker

J.P. Morgan

(JPM) - Get JPMorgan Chase & Co. Report

one of the worst of the bunch, adding 33 to the Dow's negative side.

But the forces of negativity were overwhelming. 7 companies added 10 points or more to the Dow's downside, with technology names the worst of the bunch.


(MSFT) - Get Microsoft Corporation Report



(IBM) - Get International Business Machines Corporation Report



(INTC) - Get Intel Corporation Report




accounted for a combined 130 points of today's loss.

Meanwhile, over on the Comp, which was off 4%, losses weren't being measured in points. Try "pints." Of blood.

An unholy trinity of computer-related industries, personal computing, computer peripherals and chipmakers, were all spitting up value, while investor heads spun.

Last night's warning from



kicked open the Door to Hell, when the company severely curbed its fiscal outlook for the next quarter and the coming year, dropping fourth-quarter earnings per share to 37 cents. The consensus analyst estimate from the folks at

First Call/Thomson Financial

was 62 cents a share. For 2001, Gateway sees sales coming in at $10.8 billion, far lower than it's previous estimate of $12.2 billion. The company said it missed its fourth-quarter when an expected post-Thanksgiving sales spike never spoke and 2001 will be a disappointment because PC inventories are high.

That hurts. A lot. Look at the

Philadelphia Stock Exchange Computer Box Maker Sector

, a collection of the biggest names in the personal computing industry. This index was off 8.9% today, hitting a 52-week-low along with most of its components, which includes


(AAPL) - Get Apple Inc. Report






(DELL) - Get Dell Technologies Inc Class C Report


But, really, Gateway was nothing more than the tip of a vast, far-reaching iceberg.


(ALTR) - Get Altair Engineering Inc. Class A Report

, a semiconductor company and card-carrying member of the

Philadelphia Stock Exchange Semiconductor Index

, or SOX, warned last night that it wouldn't be living up to fiscal expectations, and a veritable who's who of the analyst world

came out to say bad things .

ABN Amro


Goldman Sachs


Lehman Brothers


Credit Suisse First Boston

all lowered their fiscal estimates, taking their cues from Altera's warning last night. Meanwhile,

Robertson Stephens

dropped the company to long-term accumulate from buy and

Deutsche Bank Alex. Brown

dropped its rating to buy from strong buy.

End game: Altera fell 7.7%, while the SOX was off 6.8%, also at 52-week-lows along with many of its big-name components like


(XLNX) - Get Xilinx, Inc. Report


Lattice Semiconductor

(LSCC) - Get Lattice Semiconductor Corporation Report





Everything else in technology took its direction from Altera and Gateway. One is a chipmaker, the other, a well-know PC name. And as those dark clouds roll in on the horizon, there's little silver left to line much else with.

Companies that derive their business from sales of chips or personal computers also fell in tandem. The

American Stock Exchange Disk Drive Index

, a collection of computer peripheral makers, like



and its Zip disk, was off 14.7%.

Market Internals

Volume has picked up. But it was just more gas on a raging fire. Losers dominated winners handily as the wide spread sell off threw lots of different stocks to the downside.

New York Stock Exchange: 1,002 advancers, 1,885 decliners, 1.509 billion shares. 114 new 52-week highs, 219 new lows.

Nasdaq Stock Market: 1,312 advancers, 2,760 decliners, 2.687 billion shares. 48 new highs, 853 new lows.

Back to top

Most Active Stocks

NYSE Most Actives

  • Compaq (CPQ) : 28.6 million shares.
  • EMC Software (EMC) : 27.8 million shares.
  • Lucent (LU) : 27.4 million shares.

Nasdaq Most Actives

Back to top

Sector Watch

Safe sectors were in short supply. But those that were up had the safest businesses possible -- gold and HMOs.


Philadelphia Stock Exchange Gold & Silver Index

rose 1.8%, tacking on gains as investors like shiny precious metals instead of technology.

Understatement alert! Outside of gold, other commodity-related sectors weren't faring too well. The

American Stock Exchange Natural Gas Index

fell 4.7%, while the

Philadelphia Stock Exchange Oil Service Index

fell 6.1%. The

Philadelphia Stock Exchange Forest & Paper Products Index

fell 2.5%.


Morgan Stanley/American Stock Exchange HMO Index

rose 3.6%. People get sick, even when the stock market tanks.

Brokers made a scary southbound move, following the devastation in J.P. Morgan. The

American Stock Exchange Securities Broker/Dealer Index

fell 4%.

Back to top


Treasuries are rallying in response to the latest leg down in stock prices, dropping yields to new lows for the year. Falling stock prices continue to suggest to bond investors that growth will slow more in the months ahead, possibly prompting the

Fed to lower interest rates.

The benchmark 10-year

Treasury note was up 10/32 to 102, its yield dipping to 5.484%.

People are surer than ever that the Fed will lower the

fed funds rate in the next few months. For the first time,

fed funds futures contracts are discounting more than 100% odds that the fed funds rate will be 6.25% by April, down from 6.5% currently.

Earlier, Treasuries, which have been rallying for months on the expectation that economic growth would slow, largely ignored evidence that the slowdown is at hand.

'This is what we've been discounting since May when we began to rally," said Tony Crescenzi, bond market strategist at

Miller Tabak

and CEO of

, said. "We get the action we've been looking for, and it starts to go the other way."

The latest evidence that the economy is slowing includes a surprisingly weak showing by the

Chicago Purchasing Managers' Index


definition |

chart ), and a rise in

initial jobless claims


definition |

chart |



The Chicago PMI, which gauges the health of Midwest-based manufacturing companies, plunged to 41.7 in November, its lowest reading since April 1991, from 48.7 in October. Economists polled by


had forecast a slight rise to 48.9, on average. Readings below 50 indicate that the Midwest manufacturing sector is contracting rather than growing.

Initial jobless claims rose to 358,000, the highest since July 1998, from 339,000 the previous week. The four-week average rose to 343,000, also the highest since July 1998, from 331,000. The rise in claims for unemployment insurance indicates that demand for workers is easing as the economy slows.

Back to top


European markets were shaken from the get-go by Gateway's warning last night, and the dire consequences it would have for U.S. tech stocks. London's


closed down 22.7 to 6142.2.

Across the channel, Paris'


finished down 132.57 to 5928.08, while Germany's

Xetra Dax

, still trading, was off 180.95 to 6417.37.

The euro was rebounding at $0.8691, trading within the 87-cent range for the first time in a while.

Asian markets were mixed overnight. Japan's

Nikkei 225

rose 140.87 to 14,648.51, while the Hong Kong's

Hang Seng

lost 184.67 to 13,984.39.

The greenback was getting 110.83 yen.

Back to top