Earnings Worries Push Nasdaq Back Under 3,000
Wall Street went back into earnings-worry mode on Tuesday, cutting short the latest rally in technology stocks.
The lack of a decision by the U.S. Supreme Court in the presidential election battle also may have weighed on investor sentiment, traders said.
The Nasdaq composite index slid 83.33 points, or 2.8%, to 2,931.77, closing at its low for the session.
Falling stocks outnumbered winners by about 3 to 2 on the tech-heavy Nasdaq, though trading volume eased from recent days.
Most other broad indexes ended lower, although the Dow Jones industrials managed a 42.47-point, 0.4% gain to 10,768.27 as some investors flocked back to big-name blue chips.
A rebound in tech stocks in recent sessions had lifted the Nasdaq composite above the 3,000 mark on Monday for the first time since Nov. 17. Many traders were hoping to see Nasdaq advance on Tuesday because it would have marked the first time since August that the index had risen for three consecutive sessions.
But a new round of earnings warnings from tech companies and analysts’ downgrades of some stocks shook confidence and encouraged profit taking, some analysts said.
Also, reaching the 3,000 mark--a 16% gain from Nasdaq’s recent closing low of 2,597 on Nov. 30--encouraged technically oriented traders to sell, some said.
“Some people feel that 3,000 in the Nasdaq is an important level. So we are seeing some profit taking,” said Alan Skrainka, chief market strategist for A.G. Edwards & Sons in St. Louis.
Nasdaq had rocketed last week after Federal Reserve Chairman Alan Greenspan hinted that the Fed might be inclined to lower interest rates early next year as the economy continues to slow.
“There was some initial euphoria in the wake of Alan Greenspan’s clear message that he is poised to rescue the economy if it heads toward recession. But there are still some concerns, especially in the chip sector, that earnings will be disappointing” well into 2001, Skrainka said.
Even so, many analysts believe the market could stage another rally if the presidential battle is decided soon.
In the bond market on Tuesday, yields closed little changed despite more downbeat news on the economy.
Among Tuesday’s highlights:
* Major tech stocks pulling back included Applied Materials, down $5.44 to $45.50; Veritas Software, down $14.38 to $114.63; QLogic, down $9.19 to $110.75; Sanmina, down $9.44 to $85.06; and Qualcomm, down $9.69 to $89.81.
Also, EMC slid $7.88 to $82.13 and Sun Microsystems lost 13 cents to $33.88, a new 52-week low. Louis Gerstner, chairman of IBM, said it a speech that the proprietary systems Sun, EMC and Microsoft sell will struggle amid an “inexorable” move toward open computing standards driven by the Internet.
Microsoft, however, added 31 cents to $58.38. IBM fell $1.13 to $93.88.
* Among the day’s tech winners were many beaten-down Internet names, including Yahoo, up $1.94 to $35.81, DoubleClick, up $1.95 to $13.89, and RealNetworks, up 88 cents to $15.38.
But Net consulting firm Razorfish slid to $2.88 in after-hours trading from $3.09 in the regular Nasdaq session after it warned of a loss this quarter.
Market Roundup: C7, C8
