All good things must come to an end, they say.
And after two tech-giant disappointments and some profit-taking, Wall Street investors threw the brakes on a two-day recovery rally that led the
Nasdaq Composite Index
to its second-highest percentage gain ever and gave the
Dow Jones Industrial Average
some upward momentum after Friday's record 617.78-point plunge. Not even a slew of better-than-expected first-quarter corporate earnings could keep the upward momentum from returning to selling.
The blowup of the day was in the drug sector:
didn't have the extra strength to fight off investors' jitters after the company said it yanked a
Food and Drug Administration
marketing request for its hypertension drug
. Bristol-Myers plummeted 14 1/2, or 22.3%, to 50 5/8, although the overall sector fared well.
"It just goes to show you that there's no mercy on disappointing news from any company," said Jim Herrick, managing director of trading at
Robert W. Baird
in Milwaukee. "We're still in that kind of market."
James Maguire Jr., managing director at
, said he wasn't surprised to see a pullback after the gains of the last couple of days. "I think there's still a degree of caution that the volatility in tech might not be behind us and that there might be more to come," he said.
The Nasdaq finished the day down 87.16, or 2.3%, to 3706.41.
In Nasdaq trading,
was a standout, after a stellar earnings report shot the stock up 17 1/8, or 14.7%, to 133 1/8.
This morning's buyers, who got aboard speculative tech stocks, had jumped ship in late-day trading, sending the Nasdaq into the red after an earlier foray in positive territory. In the past weeks, skeptical investors deemed small-cap tech as a little too hot and abandoned the stocks for more traditional blue chips that usually produce strong earnings and revenues that they bank on.
But that investment philosophy didn't stick today, not after
first-quarter earnings reports delivered news of revenue weakness. The two Dow components held the Dow in the red throughout most of the session, as investors returned to tech stocks like
, which posted earnings and revenue that eased investor speculation.
"Earnings reports have been encouraging," said Maguire. "Investors are looking to get into those New Economy stocks, like AOL, that have posted revenues. Tech stocks that haven't proven themselves and are burning cash are very suspect, and it might be some time until we see them come back, if ever."
Elsewhere in tech,
TheStreet.com Internet Sector
index sank 29.67, or 3.6%, to 806.86, with
floundering. The index is now off more than 30% for the year.
But Intel and IBM can't take all the heat for today's selling. According to Peter Cardillo, chief investment strategist for
, other factors played a role. "I think it's a combination of things. A little profit-taking, the option expiration ahead of the holiday and Intel and IBM weighing down the Dow."
The Dow Jones Industrial Average, which spent some of today's session in the green, closed out the day down 92.46, or 0.9%, to 10,674.96, with tech components Intel, IBM and
applying the heaviest weight.
The financials and brokers took a hit despite good first-quarter earnings news from
Donaldson Lufkin & Jenrette
American Stock Exchange Broker/Dealer Index
But it wasn't all bad news on the Big Board. The
Dow Jones Transportation Index
was flying high, up 35.90, or 1.3%, to 2805.43, after a series of stellar results from
lost 14.14, or 1%, to 1427.47, while the small-cap
ended up slightly, adding 0.14 to 486.23.
Breadth was negative on light volume.
New York Stock Exchange:
1,469 advancers, 1,472 decliners, 1 billion shares. 28 new 52-week highs, 47 new lows.
Nasdaq Stock Market:
2,361 advancers, 1,858 decliners, 1.74 billion shares. 15 new highs, 81 new lows.
Paradise Lost and Found
TOKYO -- The initial public offering for Japanese cybermall
wasn't exactly heavenly but the shares weren't sent to Internet Hell, either, when they debuted on Wednesday.
Shares in the company, the name of which means "Paradise Market," collapsed by nearly 40% off their initial price of 33 million yen ($316,000) on the over-the-counter market, no doubt worrying both Rakuten President
and other Japanese IPO hopefuls. By the end of the day, however, shares had climbed to 30 million yen, still a loss, but not nearly as bad of a beating as it could have been.
The debut of the e-tailing firm, which is already profitable, comes as tech shares around the world are buffeted in a convulsion of emotion over heady valuations. Traders and investors in Tokyo had already griped about the company's high offering price and those who opted to wait until after the IPO to buy sure got a bargain. Despite the shaky start, many continue to argue that Rakuten remains attractive, if only for the fact that it boasts a profit.
"My eyes popped out when Rakuten first started trading but after the bids started to come in, I can say the dip was purely a one-time thing," said Tetsuro Tsusaka, strategist at
. "If the offering price was considered high, it's not now." Deutsche has no investment banking relationship with Rakuten.
To be sure, Japanese Internet plays are still getting hammered, with Net incubator and phone seller
down nearly 90% from its high in mid-February. However, if investors are looking for profits before jumping into Net plays again, Rakuten -- which had earnings of $2.4 million on sales of $5.7 million in 1999 -- isn't the only one anymore.
Shortly before the market closed yesterday,
announced that its pretax profits for the year ending March 31 jumped 420% to 2.03 billion yen, sending shares 6.7% higher Wednesday.
Although shares of parent
fell 9.8%, traders were encouraged that the stock actually traded. Many Internet shares have been trapped in trading suspensions for days because the
Tokyo Stock Exchange
, as well as the OTC, enforces a rule that shares can't trade unless bids and offers roughly match.