Skittish investors sold off technology stocks
Tuesday, pushing the Nasdaq composite index down more than 100
points for the second trading session in a row and sending all
three major market indicators into negative territory for the year.
In light trading following the Presidents' Day holiday weekend,
the Nasdaq composite index tumbled 107.03 to 2,318.35. Tuesday's
loss built on the 5 percent fall the Nasdaq made on Friday, when it
dropped more than 127 points.
The Dow Jones industrial average made a more modest decline,
slipping 68.94 to 10,730.88. The broader Standard & Poor's 500
index lost 22.59 to finish at 1,278.94.
"There's a bit more of the defensive flavor in the market
today," said Charles G. Crane, market strategist for Spears,
Benzak, Salomon & Farrell.
Since late last year, investors have been retreating to safer
stocks, such as those in the health care and consumer product
sectors. They've focused their selling on riskier tech stocks,
where earnings have suffered the most as the economy has slowed.
But Tuesday's selling put all three of the three major market
indicators in negative territory for the year. The Nasdaq has
slipped the most, down 4.4 percent. The Dow is now off 0.6 percent,
and the S&P; 500 has lost 1.7 percent.
"There seem to be new victims on the list every day," Crane
said particularly of the tech sector.
Tuesday's victims included telecommunications companies that
suffered after analysts reduced their outlooks on their stocks. The
downgrades affirmed investors' fears that it will take a while for
the long-battered tech sector to recover.
Nextel Communications fell $3.13 to close at $22.31 after
Salomon Smith Barney lowered its rating on the stock. The brokerage
cited Nextel's difficulties retaining customers.
Investors also punished PMC-Sierra, down $7.88 at $44.63, and
Applied Micro Circuits, down $5.75 at $38.06. Both were downgraded
by Credit Suisse First Boston, which cited poor business conditions
and weak customer orders.
Investors were disappointed by fourth-quarter earnings results,
but the reason for their selling now is that profits aren't
expected to pick up until at least the second half of the year,
"The anticipation of anything good happening is not there
anymore and the selling continues," said Gary Kaltbaum, technical
analyst at J.W. Genesis.
Falling tech prices also brought the Dow lower. Intel tumbled
$2.94 to $31.44, hurt as it said that decreased demand for computer
chips was prompting it to enact a cost-cutting plan, which includes
job cuts through attrition.
The Dow's losses were curbed somewhat by retailing stocks.
Investors rewarded companies withstanding a slowing economy and
slumping consumer confidence.
Wal-Mart rose $1.04 to $53.40 after reporting fourth-quarter
results that beat Wall Street's expectations by a penny. The
discount retailer said quarterly earnings topped $2 billion for the
Another Dow retailer, Home Depot advanced $1.09 to $44.09
despite warning that it is still suffering soft sales and weak
prices. Its fourth-quarter earnings met analysts' lowered
Declining issues outnumbered advancers slightly more than 8 to 7
on the New York Stock Exchange. Volume was 1.10 billion shares,
down from 1.245 billion on Friday. The market was closed Monday in
observance of Presidents' Day.
The Russell 2000 index, which measures the performance of
smaller company stocks, finished down 8.14 at 491.14.
Overseas markets also were mostly lower. Britain's FT-SE 100
index lost 1.9 percent, Germany's DAX index declined 1.0 percent
and France's CAC-40 index fell 0.6 percent. But Japan's Nikkei
index rose 1.0 percent.