Today's Market: Tech Falls Down, Breaks Its Crown and Everything Comes Following After

No happy ending for this market. Both the Dow and the Nasdaq were eaten by the wolf today.
Author:
Publish date:

Wall Street took a cue from Jack and Jill today and got all kinds of busted up, despite a try for a late rally.

Red was the dominant color of the day, as markets plummeted from the get-go. Technology stocks dropped early and often on lingering fears about a business slowdown, before gaining some traction in the last two hours of trading. Tech-related companies, led by the semiconductors, bounced off session lows. But that was just a bounce, with emphasis on the "must go down" part of the "what goes up" equation. By the end of the day, nothing was safe.

Sure, both the

Dow Jones Industrial Average

and

Nasdaq Composite Index

ended a bit off session lows, but anemic volume and a scarcity of buyers have kept hopes for any sort of rally far from Wall Street. No matter what stock, no matter the industry, the number of stocks with losses handily topped those few lucky enough to have gains.

The Dow dropped 167 to 10,463, as a decided number of its 30 industrials sat with losses.

Coca-Cola

(KO) - Get Report

was one of the worst, adding a weighted 30 to the Dow's downside after the news broke that it was in talks to purchase

Quaker Oats

(OAT)

for $15 billion. Nobody seemed to be very excited about the acquisition, least of which

Salomon Smith Barney

, which cut the company to outperform from buy and lowered its price target to $65 from $68.

A funk in financials also helped crush the blue-chips.

J.P. Morgan

(JPM) - Get Report

,

Citigroup

(C) - Get Report

and

American Express

(AXP) - Get Report

added a combined 59 to the Dow's redness, making a bad day even worse.

Over on the

Nasdaq Composite Index

, the picture was even bleaker. The Comp fell 152 to 2876, bringing the Comp back below 2900, a level it first crossed in August 1999, some 15 months ago. Today's close really turned back the clock, challenging the sector's 52-week-low of 2859.4. Today, the Comp traded within one slim point of that record low.

This has been a bloody and brutal month for the Comp. So far this November, marred by election uncertainty and earnings shortfalls, the Comp is off 14.3%. In comparison, the

S&P 500, the benchmark by which most money managers' results are gauged, has only dropped 5.8%.

Dot-Bombs and the Tech Wreck

Analyst downgrades further stroked an inferno of doubt, engulfing much of the Nasdaq's four-lettered friends in a curse. This morning,

Morgan Stanley Dean Witter

downgraded a

whole bunch of networking favorites, like

Cisco

(CSCO) - Get Report

and

Juniper Networks

(JNPR) - Get Report

.

Lehman Brothers

cut

eBay

(EBAY) - Get Report

. And then, just after lunchtime in New York City,

Wit Soundview

cut its ratings on personal computer makers, hitting

Apple

(AAPL) - Get Report

,

Dell

(DELL) - Get Report

and

Gateway

(GTW)

.

These downgrades knocked the wind out of the entire industry, pushing out any possible bargain buyers after a particularly rocky earnings season. The post-earnings, pre-holiday mood has been rather grim after most companies warned before releasing third-quarter earnings, guiding analyst estimates lower, and then producing unspectacular earnings in-line with those diminished expectations. And to make matters worse, a handful of poor future forecasts have cast a long shadow over the economic outlook for the industry. Just look at the once-triumphant dot-coms.

After the eBay cut and fears of another post-holiday washout on the heels of high-profile closings from

Pets.com

and

Furniture.com

,

TheStreet.com Internet Sector Index

was off 7.1%. After the Wit Soundview moves, the

Philadelphia Stock Exchange Computer Box Maker Sector

dropped 4.9%.

Still, things could have been worse. The semiconductors showed signs of hope late in the day. Once off more than 3.8%, the

Philadelphia Stock Exchange Semiconductor Index

ended with a loss of 1.4%.

Market Internals

Losers doubled up winners while volume was nonexistent. And like rats in a kitchen, that's not a good sign of health.

New York Stock Exchange: 976 advancers, 1,848 decliners, 953 million shares. 63 new 52-week highs, 121 new lows.

Nasdaq Stock Market: 972 advancers, 2,998 decliners, 1.691 billion shares. 20 new highs, 370 new lows.

Back to top

Most Active Stocks

NYSE Most Actives

  • Nortel (NT) : 28.5 million shares.
  • AT&T (T) - Get Report: 18.9 million shares.
  • General Electric (GE) - Get Report: 14.8 million shares.

Nasdaq Most Actives

Back to top

Sector Watch

Isn't it amazing how the word "again" can change the meaning of a sentence?

Take the sentence: "Technology got killed. Again."

Sad but true. Those once red-hot tech names were stone cold as investors stay wary of stocks now seen as risky. The spark that lit today's wildfire sell-off was a broad downgrade by the folks at

Morgan Stanley Dean Witter

. The analyst downgraded a

handful of networkers, slashing

Cisco's

(CSCO) - Get Report

price target to $75 from $90 and dropping both

Juniper Networks

(JNPR) - Get Report

and

Redback Networks

(RBAK)

to outperform from strong buy.

Once upon a time, there was an industry known as biotechnology, "biotech" for short. And these biotechs were quite popular, doubling and tripling and quadrupling from where they were just two years ago. But in the last three weeks, that fairy tale has become a nightmare. The

American Stock Exchange Biotechnology Index

has dropped more than 25% over that span, falling from near record highs.

Today, biotechs got killed. Again. The AMEX biotechs were off 7.4%.

If you're looking for winners -- try healthcare. The

S&P Health Care Index

rose 0.2%.

Back to top

Bonds/Economy

On Friday, those bonds sold off a bunch, the first long-maturity dip in five trading days. Today, the bonds were back in town, tracking higher, thanks to a call from

Lehman Brothers'

influential chief equity analyst Jeffrey Applegate, who adjusted his investment allocation strategy. He now recommends taking cash and putting it into bonds. Applegate's strategy calls for investors to hold 80% of their portfolio in stock and 20% in bonds.

The benchmark 10-year

Treasury note was up 8/32 to 100 18/32, yielding 5.673%.

Back to top

International

The London, the

FTSE 100

ended down 95.10 to 6345.

Over on the continent, the

CAC-40

in Paris finished off 140.13 to 6021.8 and the

Xetra Dax

in Frankfurt was 130.6 lower to 6621.7.

The beleaguered euro was lately trading higher at $0.8512.

Asian equity markets were mixed as Tokyo stocks closed lower on uncertainty over the country's political future, while Hong Kong closed higher.

In Tokyo, the

Nikkei 225

slipped 12.65, or 0.09%, to 14, 531.65.

The greenback was lately trading higher to 110 yen.

Hong Kong's

Hang Seng

index rose 1.09%, or 165.81 points to 15,346.66 on strength in defensive banking stocks and telecom

China Mobile

.

Back to top