Not even a mother could love today's stock market; many are probably on the phone chewing out their brokers at this moment. Today was the worst performance by the market so far this month, as money managers sold brokerage stocks, technology names, and everything in between. Losers outpaced winners three-to-one on both the
New York Stock Exchange and the
Nasdaq Stock Market.
The damage rings up like this: the
Dow Jones Industrial Average was led into a chasm by
, a consistent loser since the announcement of its merger with
The Dow lost 118.48 to 10,808.52, as J.P. Morgan contributed 46 points of downside. The
Nasdaq Composite Index fell 108.71 to 3726.52; the
S&P 500 dropped 21.30 to 1444.51, and the small-cap
Russell 2000 dropped 14.20 to 516.68.
Carnage was most easily identifiable in the technology sectors. Ongoing concerns about declining demand from the Internet and PC-makers has picked up in recent days and accelerated the Nasdaq's decline.
"Anything you can think about as a possible worry is a worry right now," said Sam Ginzburg, senior managing director of equity trading at
. "Everyone is focused on some kind of worry."
Not that investors don't have the ammunition for which to pull the trigger. Earnings warnings from the likes of
and analyst downgrades of
have only heightened the market's concern about a slowdown in global growth.
Because of the central necessity for chip technology, the
Philadelphia Stock Exchange Semiconductor Index
serves as a good proxy for market sentiment. Frank Gretz, technical analyst at
, believes the recent woes suggest that the market is looking for a slowdown in global demand. That index fell 2.4% today and has suffered through September, losing 17.5%. At 951.2, it's nearing technical support levels, according to Gretz.
"When business slows down, it slows down, and maybe that's what these guys are seeing," said Gretz. "The whole sector is suffering a bit. Tech-land is not looking too good from here."
Big-cap technology stocks are also approaching those levels.
, is going nowhere, and
, despite a good earnings call last week, is also struggling. Cisco lost $2.69 to $60.06 today, and Oracle dropped $1.84 to $76.47.
The caveat here is that this kind of sluggish action, dominated by nail biting, is typical of pre-announcement season. The market is faced with tough earnings comparisons this quarter, as growth accelerated in the second half of last year. While the number of negative pre-announcements overall is still less than the historical average, warnings have been issued by a number of prominent companies. If growth is slowing, high valuations isn't going to sit well with investors.
Valuation "certainly appears to be the obsession," said Jack Shaughnessy, chief market strategist at
. "With high multiples, people don't have much patience. High price-to-earnings ratios are not a problem if earnings growth goes along with expectations."
A number of momentum-driven names also came under significant pressure, including
, which lost $8.50 to $290, and
, losing $9.69 to $192.
TheStreet.com Internet Sector
index was marked for death today, falling 3.8%.
Oil Makes Stocks Smell Like Vinegar
Investors also continue to worry about fuel costs. Oil prices breached the $36 mark today, and while higher oil prices are a serious issue for only a number of companies, they're a minor issue for a slew of companies, many of whom have some kind of fuel needs. Consumers, of course, are also in need of fuel, and higher energy prices are cutting into consumer spending.
Dow Jones Transportation Index
was sent for a ride thanks to multiple downgrades of air carrier
. Delta lost $1.19 to $45.81 today, and the transport average was off by 2%. The
American Stock Exchange Airline Index
Morgan Stanley Cyclical Index
fell 1.5% today, and the
Morgan Stanley Consumer Index
dropped 0.6% today. Industrial stocks were hurt by an earnings warning from
, which cited declining demand for its warning, issued earlier today. That stock lost $7.69, or 20%, to $30.50 today.
Finally, the brokerage stocks, which had provided leadership as merger mania engulfed that sector, abdicated leadership today.
lost $8.13 to $134.88 and
dropped $4.88 to $60. The
Amex Broker/Dealer Index
Breadth was crap-tacular on middling volume.
New York Stock Exchange: 684 advancers, 2,215 decliners, 956 million shares. 87 new 52-week highs, 107 new lows.
Nasdaq Stock Market: 1,099 advancers, 2,977 decliners, 1.58 billion shares. 60 new highs, 149 new lows.
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Most Active Stocks
NYSE Most Actives
- Nortel (NT) : 20.3 million shares.
Lucent (LU) : 19.7 million shares.
America Online (AOL) : 18.8 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 58.2 million shares.
Intel (INTC) - Get Report: 49.7 million shares.
Qualcomm (QCOM) - Get Report: 36.8 million shares.
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Pick a sector, and it wasn't doing anybody any favors today. The
Nasdaq Biotechnology Index
and its cast of high-flying wunderkinds was foul, losing 5.2%, led into the abyss by
Protein Design Labs
, which dropped 12.5%.
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The disinversion of the Treasury yield curve continued today, with the 30-year Treasury bond's yield now higher than the five-year note's for the first time since January.
This is happening because Treasury prices are mixed. Long-maturity issues are lower in price, causing their yields to rise relative to those of the short-maturity issues, which are little changed.
This continues a trend that emerged last week based on two key assumptions. First, that the
Fed is through hiking interest rates, and may even cut the
fed funds rate in the next several months if rising energy prices cause economic growth to slow too much. Investors typically push up long-term yields relative to short-term ones when they expect the Fed to take action to stimulate economic growth.
Second, that Election Day could spell the end of the policy of using federal government surplus funds to pay down the national debt by buying back mainly long-maturity Treasuries from investors, inflating their value relative to shorter-term Treasuries.
The benchmark 10-year Treasury note lately was down 5/32 at 99 3/32, lifting its yield to 5.871%.
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ended down 7.10 to 6410.20. Across the channel, the
in Paris ended down 92.27 to 6522.38, and the
in Frankfurt finished off 107.85 to 6891.69.
index shed 152.12 to close at 16,061.16. In Tokyo currency trading, the greenback fell slightly lower against the yen to fetch 107.02. It was lately trading at 106.90. Korea's key
index dropped 50.64, or 8.1%, today to close at 577.56. Hong Kong's
index fell 689.37, or 4.2%, to stand at 15,560.16, largely on concerns over higher oil prices and the weakness in the euro.
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