Ugh! No post-President's Day rally here.
Instead, the major indices got kicked when they were already down.
Dow Jones Industrial Average and the
Nasdaq Composite Index finished at session lows after both started on the upside at the opening bell. The Nasdaq's closing number also had the distinction of being its second-lowest of the year. (Its lowest close for 2001, hit on the first trading day of the year, was 2291.9.)
The tech-heavy Nasdaq steadily dropped fired by a number of sparks, including several negative analyst notes.
Chipmakers haven't been getting much positive attention lately and today, the sector got a spanking from
, which cut earnings outlooks because of worsening conditions in the communications industry.
Applied Micro Circuits
were singled out; they bled as a result. JDS was down 4.4% to $34.31, PMC fell 11.8% to $44.63, Applied Micro dropped 12% to $38.06, and Broadcom was 12.9% lower to $64.38. All hit 52-week lows, with the exception of Applied Micro.
was the most actively traded stock on the Comp, down 7.5% to $26.06. It, too, hit a 52-week low (theme of the day, perhaps?). Its tumble was helped along by comments from CEO John Chambers, who told a Swedish newspaper over the weekend that much of the U.S. economy is already in a recession and the downturn threatens to spread. He went on to say that he thought the
Fed should continue to cut interest rates and that he supported
proposed tax cuts.
Technology stocks just can't seem to find their footing. In January, the Nasdaq made steady gains, seemingly making a comeback from the losses it racked up in the last two months of 2000. But the rally was premature, and the Comp spent this month undoing those gains.
The who's who of Nasdaq issues at 52-week lows today include
. None of this was helping to clear up the negative sentiment in the tech sector.
Also on that list was wireless telephone company
, which was chopped 12.3% to $22.31, after
Salomon Smith Barney
rating to outperform from buy. The firm also lowered its 12-month price target to $35 from $48 a share.
Big Board's tech components weren't left out of the 52-week-low fun. Fiber-optic network equipment supplier
, fiber optics king
and data storage giant
were just a few of the well-known names at those levels.
And if you hadn't noticed, telecom-related stocks were among the hardest hit, including such foreign-based mobile phone stocks as
The Dow had few positive supporters. Retailers
The Home Depot
helped out. Wal-Mart, the world's largest retail chain,
beat lowered estimates, while Home Depot
met lowered estimates.
Money fled to defensives, with pharmaceuticals
Johnson & Johnson
on the upside. Johnson & Johnson rose 1.6% to $96.03, and Merck jumped 0.8% to $77.90.
was taken down 0.7% to $31.44 after it said that it was instituting cost cuts in an effort to save money. The company said it would cut discretionary spending, limit hiring and defer performance pay raises for senior management.
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The aforementioned news from the retailers were helping
soothe investors' fears concerning retail. The
S&P Retail Index
was 1.9% higher. Not all was great in the sector, however. Drugstore chain
was falling 17.4% to $32.45, despite meeting estimates, because it forecast 2001's first-quarter and full-year results below estimates.
Financials took a beating today, with the
American Stock Exchange Broker/Dealer Index
5.4% lower, the
S&P Insurance Index
off 2.25% and the
Philadelphia Stock Exchange/KBW Bank Index
down 3.6%. The sector got smacked with negativity from two sources.
CIBC World Markets
said in a note from analyst Ken Worthington that "continued weakness in the equity markets and advisory environments" continue to cause concern among financial firms. And
Keefe Bruyette & Woods
issued a number of ratings changes, saying in a research note that "market volatility and economic uncertainty appear to be taking their toll on the retail segment of the brokerage business.''
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Treasury prices finished higher.
The benchmark 10-year
Treasury note closed up 2/32 to 99 7/32, lowering its yield to 5.101%.
Standard & Poor's
speculative grade credit index, which measures the difference between the yields of government Treasuries and those of bonds rated below BBB+, was at 894.5 basis points, or 8.945%, on Friday. The difference has steadily decreased from a high of 10.74% on Jan. 2, just before the
Federal Reserve began cutting rates. Expectation that the economy will recover with help from the Fed has sent U.S. Treasury prices lower on weakening demand, preventing yields from falling further. (Prices and yields move inversely.) This has contributed to the narrowing of the index.
A recent survey by the
Federal Reserve Bank of Philadelphia
estimates that the U.S.
gross domestic product
) should grow by about 2.2% in 2001, down from the 3.3% annual growth that was forecast two months ago. However, that's not likely to jolt the market, as most economists and regional Fed presidents lately have been pegging the growth rate at 2% to 2.5%.
There is no economic news due out today.
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Over in Europe, markets took a swandive into their trading day swansong. After once having gains all three of Europe's major bourses were deep in the red. London tried clinging to midday gains like a cat on a lampshade, before dropping into the deep abyss of a tech sell off. The
fell 114 to 5980 -- that's a drop of 130 points in just under four hours. Germany's
was off 21 to 6452, while Paris'
lost 36 to 5549.
On the currency front, the euro continued to slump, moving further and further away from the 94-cent level it traded at just weeks ago. It last traded at $0.9097, lower than the 91 cents or so it traded around during Friday's session. The yen traded at 115.54, relatively unchanged.
Tokyo's markets were up, something of a rarity lately. The beleaguered
knocked home a gain of 128.8 to 13,248.4 after traders shrugged off a not-so-good earnings forecast from
. Chipmakers, which have been destroyed in recent weeks, managed to actually make some gains, something that many said was a sign of a tech bottom. Then again, American markets took a day off yesterday and hopeful traders operated without the specter of another American sell off on the horizon. Hong Kong's
gained 36.4 to 15,527.4.
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