Alan G. and his
Fed cohorts know how to shake things up.
Nasdaq Composite Index and the
S&P 500 both finished at 52-week lows: The Nasdaq finished down 112.8 points at 2511.7, while the S&P closed down 17.14 points at 1305.60. The Nasdaq last hit a 52-week low on Nov. 30, when it finished the day at 2597.9, while the S&P 500 hit its most recent yearly low of 1312.15 just last Friday. The
Dow Jones Industrial Average got smacked down but wasn't hurt too badly, especially considering it gained more than 200 points yesterday.
Ahead of the announcement from today's
Federal Open Market Committee meeting, the market was cautiously rallying for the most part. But when news came out that the Fed wasn't going to cut rates, but was adopting an easing bias, the market took a dive. The major indices managed a bit of a comeback, but then sold off again right into the closing bell.
A story from
The Wall Street Journal
yesterday said the Fed was considering cutting rates this time around instead of waiting until its January meeting -- or even later in the first quarter. Although most considered a rate cut today unlikely, the market responded like it was banking on it.
Steven Goldman, market strategist at
, said, "The Nasdaq's reaction was, 'We need a bigger Band-aid.'" He said if you go back to this time last year, when the Fed was inflicting its rate hikes, stocks on the Nasdaq weren't responding the way stocks on the
New York Stock Exchange were.
Goldman said tech stocks didn't heed the warnings as NYSE did. Instead tech stocks have seemed to take the stance that they need to see the whites of the warnings' eyes rather than looking at telltale signs, he said.
This time of the year is usually the "sweet spot of seasonal strength," Goldman said, adding that the market will bounce back in a couple weeks, again ahead of the Fed meeting.
Meanwhile, as if the Nasdaq needed any help in killing itself,
jumped in with news that it agreed to pay $2.6 billion in stock for privately owned
. This didn't sit well with investors. Ciena, which makes telecommunications equipment, was off 25.7% to $73.19.
tumbled 21% to $63.38 after
Credit Suisse First Boston
released a research note saying the company's growth in its core accounts was moderating more than expected.
, which makes computer circuit boards, fell after it announced better-than-expected second-quarter earnings, but issued a warning for the third quarter, citing a slowdown in demand. The stock was down 52% to $12.31.
Even nontech stocks got in on the bad-news bandwagon, with discount variety store chain
warning its fourth-quarter earnings would miss estimates. Not surprising, since retailers across the board have warned of a slowdown in sales. Dollar Tree also got socked with some earnings and price-target cutting by
. Dollar Tree plunged 44.5% to $20.44.
On the Dow, blue-chip
was the second most actively traded stock on the Big Board after it confessed that it sees 2001 earnings at the lower end of estimates. It was also the heaviest detractor on the Dow.
The San Antonio-based local phone company found no absolution from investors, dropping 12.7% to $46.56. And
was even less forgiving, downgrading the company and slashing its 12-month target and its 2001 EPS view.
The blue-chip index couldn't fight the downward pull of SBC, which was getting help from financials
tried to add some pop to the index. It got a boost after its purchase rating was reaffirmed by
yesterday. It closed up 3.4% to $56.75.
Elsewhere on the NYSE, contract electronics maker
posted better-than-expected earnings and reassured investors by saying that demand for data networking and telecommunications products more than offset the slowdown in PC and mobile telephone demand. The stock rose 18.8% to $31.75.
Breadth was just barely positive on the NYSE, but terrible on the Nasdaq. Volume was
New York Stock Exchange: 1468 advancers, 1435 decliners, 1.3 billion shares. 205 new 52-week highs, 109 new lows.
Nasdaq Stock Market: 1339 advancers, 2658 decliners, 2.3 billion shares. 84 new highs, 483 new lows.
Back to top
Most Active Stocks
NYSE Most Actives
- Citigroup (C) - Get Report: 24.7 million shares.
SBC Communications: 23.4 million shares.
Compaq (CPQ) : 21.5 million shares.
Nasdaq Most Actives
- Cisco (CSCO) - Get Report: 97.3 million shares.
Sun Microsystems (SUNW) - Get Report: 68.9 million shares.
Microsoft (MSFT) - Get Report: 59.3 million shares.
Back to top
Bush-favored stocks were back to being attractive with the
American Stock Exchange Pharmaceutical Index
American Stock Exchange Tobacco Index
both finishing on the upside.
Retailers were floundering again. Lately, the sector's been kicked again and again on slowing sales. The
S&P Retail Index
dropped 3.7%. The world's largest retailer
sank 5.1% to $48.
Back to top
Treasury prices closed down after the
Federal Open Market Committee said the risks of recession outweigh the risks of inflation, moving it closer to cutting rates in the near future.
The benchmark 10-year
Treasury note closed down 5/32 at 104 5/32, yielding 5.196%.
In economic news, the
) report showed that the trade deficit narrowed to $33.2 billion in October from $33.7 billion in September. Imports and exports both fell.
BTM-UBSW Weekly Chain Store Sales Index
chart ) fell 0.6%, its third consecutive decline. The
Redbook Retail Average
chart ) found December sales running 0.2% behind November after three weeks, widely missing the target of a 1% gain. These numbers indicate that consumer spending is slowing.
Back to top
European indices closed on the upside, when American markets had been rallying ahead of the Fed announcement.
gained 49 to 6295, largely supported by telecommunications stocks after
said a whole lot of nice things about the sector, including that it's undervalued and investors should increase their holdings. On the Continent, the Paris
jumped 71 to 5959, while Germany's
rose 89 to 6479.
The euro's been pretty closely watched in the last half year, as the fledgling currency dipped to record lows in the past few months, before bouncing back. The comeback, which recently brought the euro up to 12-week highs, was postponed for another day. The euro last traded at $0.8950, still unable to stay past the 90-cent barrier.
Asian markets have been closely tied to the performance of America's
Nasdaq Composite Index. And as the Comp goes, ending in losses for each of the last five sessions, so goes the
. Japan's major economic index fell 351.53 to 14,132.37. Hong Kong's
was a contrarian, gaining 163.51 15,188.04.
And the yen, well, it last traded at 112.35. The dollar's been gaining in strength over the past few weeks.
Back to top