Nasdaq Tumbles as Selling Hits Tech Stocks; Dow Off 70
Technology, telecom and Internet stocks were hit by a wave of profit-taking on Tuesday after weeks of heady gains, sending the Nasdaq composite index reeling.
Meanwhile, the dollar sank again versus the yen, and the euro fell against the yen and the dollar. Bond yields pulled back as oil prices plummeted.
On Wall Street, the Nasdaq index slumped 85.21 points, or 2.5%, to 3,336.16, in a sell-off that gained steam through the afternoon.
The Dow Jones industrials, by contrast, gave up a 97-point gain to finish off 70.11 points, or 0.6%, at 10,877.81.
The Dow finished the month with a 1.4% gain. But the blue-chip index was far outperformed by the Nasdaq index, which was up 12.5% for November despite Tuesday’s big loss.
The Dow on Tuesday was supported for much of the session by a rebound in financial stocks, as Treasury bond yields eased from near two-year highs.
The yield on the benchmark 30-year T-bond slipped to 6.29% from 6.30% on Monday.
Some bond traders may have felt less jittery about inflation as crude oil prices tumbled. Near-term futures in New York dived $1.37 to $24.59 a barrel, the biggest drop in a month. Oil was hammered as traders speculated that the United Nations could soon resolve a deadlock over its Iraq policy, allowing Iraq to expand exports after nine years of sanctions.
In currency trading the trend of recent days continued: The dollar fell to 101.88 yen from 102.35 on Monday, nearing the four-year low of 101.64 set last Friday, as traders doubted Japan would take strong enough steps to arrest the yen’s advance.
Meanwhile, the euro fell to a new lifetime low of $1.009 from $1.010 on Monday, threatening to fall through the $1 mark. The euro began the year at $1.17, but traders see the currency remaining weak in part because the strong U.S. economy is attracting more capital.
In the stock market, the selling in tech shares was the story of the day. The big question: Is this just a brief bout of profit-taking--or the start of a deeper sell-off?
The broad market held up fairly well: Winners narrowly edged losers on the New York Stock Exchange; but losers had a 23-18 edge on Nasdaq, where trading remained extremely heavy.
But “as technology goes, it will take the rest of the market with it,” warned Gary Kaltbaum, technical analyst at J.W. Genesis Securities in Boca Raton, Fla. “Technology makes up so much of the S&P; 500--and an increasing share of the Dow--that most averages can’t hold up without it.”
Among Tuesday’s highlights:
* America Online fell $6.13 to $72.88 after saying it will issue about $1.3 billion in zero-coupon convertible subordinated notes, which could eventually dilute the value of the existing shares.
Among other Net shares, Broadcom plunged $23.88 to $179.06, CMGI fell $8.19 to $147.31, PSINet lost $5.44 to $50 and Inktomi dropped $3.94 to $129.06.
Yahoo slid $13.38 to $212.75--but then soared to $235 in after-hours trading, when Standard & Poor’s said it will add the stock to the S&P; 500 index.
* Other recently highflying tech and telecom stocks down sharply included Cisco Systems, down $3.56 to $89.19; Veritas Software, down $8.63 to $91.56; Qualcomm, down $8.94 to $362.31; and JDS Uniphase, down $23.38 to $228.75.
But Apple Computer rose $3.31 to $97.88 after a Donaldson Lufkin Jenrette analyst said strong demand for Apple’s computers will help the company beat Wall Street’s expectations for the December quarter.
* Rebounding financial stocks included Wachovia, up $1.31 to $77.44; Wells Fargo, up $1.50 to $46.50; and American Express, up $3.29 to $151.10.
* Conseco added $1.69 to $20.25 after the insurance firm said it will sell $500 million of preferred stock to private equity firm Thomas H. Lee Co. and cut its dividend 67% to shore up profit.
Market Roundup, C11
