Stock Market Today: Nasdaq Drops as Chip Stocks Issue Warnings

NEW YORK (TheStreet) -- U.S. stocks were exhibiting wild swings between gains and losses Friday morning, reflecting seasonal volatility, concerns about global growth, and excitement over third-quarter earnings. 

The Dow Jones Industrial Average  was down slightly at last check. The Nasdaq   shed 1.29% amid weakness in the chip sector. The PHLX Semiconductor Index (SOX) tumbled 6.22%.

The S&P 500   fell 0.48%. Widespread jitters about a cooling Chinese economy and a questionable economic recovery in Europe coming just as U.S. quantitative easing nears its end has brought the S&P down by over 2% so far this week. The index is on track for a third straight weekly loss. According to Wells Fargo, U.S. equities have experienced a loss of roughly $750 billion, or 4.1% in value, since reaching its peak on Sept. 18.

Peter Cardillo, chief market economist at Rockwell Global Capital, said, however, that the downward move so far remains within the range of most of the recent pullbacks.

"The fear of the global economy weakening further and the disinflationary atmosphere that is gripping Euro-Land has deflated markets hitting hard oil prices and weighing on equities around the globe," said Cardillo. "However, with the U.S. economy still not showing any signs of losing much economic ground, the chances of a major correction are still in question. In other words, we expect earnings to lift the market sentiment."
 
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Meanwhile, Ryan Detrick, strategist at research firm See It Market, noted that the market has seen five 1% moves up or down in just seven trading days in October vs. five total in the previous five months. Friday's moves have so far confirmed the trend of "violent moves in very short timeframes," he said.

Telecom equipment makers and their chip suppliers were seeing more pain after Juniper (JNPR) and Procera (PKT) issued third-quarter warnings -- the latest bad earnings news for an industry that has seen plenty due to soft wireline capital expenditures. Juniper was off more than 8% while Procera dropped 33.33%.

Analysts were defending Juniper, arguing that the bad news has been priced in and that telecom capex is likely to improve in 2015. Bulls have argued that Web and mobile traffic growth as well as software-defined networking and network functions virtualization investments will ultimately boost capex in spite of industry-service revenue pressures.

A few enterprise-focused networking vendors were also having a rough day. Cisco (CSCO) fell below $23.50 and Alcatel-Lucent  (ALU) was down below $2.50.

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