Overall, Wednesday turned out to be an ugly day for stocks, with investors dumping technology stocks for a third straight session, then late in the day, dumping blue chips as well.
The tech tumble pushed the Nasdaq composite to its first
close below 4,000 since January. It brought the blue-chip Dow
Jones industrial average down 200 points in less than an hour
and turned even the broad Wilshire 5000 index negative.
What's more, it stunned market players. Traders had cheered
last Tuesday as a last-minute rebound pulled stocks off steep
lows. But there was no rebound this time, and no cheering,
leaving market makers with only sell orders as investors took
cash off the table.
"It was a panic and it feeds on itself and everyone just
decided to bail at the same time," said Arthur Hogan, chief
market analyst at Jefferies & Co."
Asian Markets Follow Wall St.
Asian technology stocks were hit hard on Thursday morning by the overnight plunge on the Nasdaq
but support in traditional sectors limited falls in some markets.
Markets in Japan, Hong Kong and Taiwan were all trading around two percent lower while Australian shares were down more than one percent.
Tokyo's benchmark Nikkei average dropped 1.8 percent to 20,456.20 by midday on heavy selling of high-tech issues after the Nasdaq's plunge.
Hong Kong's Hang Seng Index fell more than two percent at the open amid concern over write-offs for China Telecom (Hong Kong) Ltd. when it reports its results later in the day, but the benchmark index recovered a bit to end the morning session 1.8 percent lower at 16,279.64.
Taiwan stocks closed sharply lower as the Nasdaq woes battered heavily weighted electronics shares, although financial stocks offered some support. The TAIEX ended 2.51 percent lower.
Singapore's electronics sector lost more than four percent
on the Nasdaq fall while the overall Singapore market fared a
bit better with the 55-stock blue chip Straits Times Index
ending the morning session 1.23 percent lower at 2,109.17.
In Sydney, Australia, the All Ordinaries Index was down 51.1 points to 3,082.3 in late trade.
The South Korean market was closed on Thursday due to an election.
On Wall St., 'Old Economy' Stocks Surge
Earnings dominated the scene for most of the trading day,
with profitable, "old economy" stocks surging on the back of
strong quarterly numbers while former high-flying techs fell.
But as the pullback gained momentum and trading volume
climbed, even sectors that spiked higher in early trading lost ground.
The Nasdaq composite index was pummeled, falling 7.06
percent, or 286.27 points, to 3,769.63 to log its second-biggest
one-day point loss ever and its lowest closing price since Jan. 6.
Heavyweight stocks weighed the Nasdaq down and pulled
blue-chip investors into the selling spree. The Dow Jones
industrial average lost 161.95 points, or 1.43 percent, to end
at 11,125.13, reversing its earlier gain of more than 100 points
with a pullback in the last hour of trading.
The Dow's four top tech names dove, with Hewlett-Packard Co., Intel Corp., International Business Machines Corp. and Microsoft Corp. all sliding and offsetting strength in such Dow
stalwarts as J.P. Morgan & Co., American Express, Procter & Gamble and DuPont.
The Standard & Poor's 500 index dropped 2.23 percent, or
33.42 points, to 1,467.17, while the Wilshire 5000 fell 2.76 percent to 13,586.29.
"It's sweaty and sloppy out here. It was slow and then it
was fast and before you knew it, the (Nasdaq) comp did a job on
the Dow and we're in freefall. I don't know where we go next,"
one trader said from his firm's trading desk.
The selloff has become so prolonged that it finally hit the
heavyweights, pulling the Nasdaq 100 index of top stocks down
7.05 percent to 3,633.63. Microsoft Corp. lost 4-1/2 to 79-3/8,
a level not seen since last June, after Goldman Sachs cut its
revenue estimate for the software giant.
But at the very least, analysts say, the volatile action has brought
some welcome skepticism to the technology market.
"Investors will be more discriminating in their buying of
technology and Internet stocks," said Alfred E. Goldman, chief
market strategist at A.G. Edwards & Sons in St. Louis.
Financial services powered the Dow earlier in the day, with J.P. Morgan saying its first-quarter profits rose nearly 5 percent to a record $628 million, surging past expectations.
"There is a little case of the nerves in the market," said
Peter Coolidge, senior equity trader at Brean Murray & Co. "The
good news is that there seems to be a rotation out of technology
into the more traditional "old economy" sectors. The money is
not necessarily flowing out of the equities market."
The Associated Press and Reuters contributed to this report