Investor Frustration Batters Tech Stocks
After the Federal Reserve failed to give investors the deep interest rate cut they wanted, Wall Street’s angry reaction Tuesday left more wreckage in the already battered technology sector.
Bank and brokerage stocks, usually sensitive to rate swings, also suffered. But many so-called cyclical stocks--shares of heavy-industry companies and others that should benefit if the Fed can keep the economy out of recession--rallied in the session.
The Treasury bond market also liked what it saw from the Fed, as yields tumbled anew. The 10-year T-note yield fell to 4.74%, down from 4.82% on Monday. The 2-year T-note fell to 4.21% from 4.31%.
But bonds’ rally may have stemmed in part from money fleeing the tech sector for safer havens.
Investors’ reaction to the Fed’s announcement at 2:15 p.m. EST was swift: The market had been holding on to a modest rally for much of the day, but that evaporated with the announcement. Key indexes dove, quickly rallied back, then sank almost relentlessly the rest of the day.
The tech-dominated Nasdaq composite bore the brunt of the decline, as it has for much of the last year. The index finished down 93.74 points, or 4.8%, at 1,857.44, its lowest since November 1998.
The Dow industrials fell 238.35 points, or 2.4%, to 9,720.76, the lowest finish in nearly two years. The Standard & Poor’s 500 index also slid 2.4%.
Losers swamped winners by 11 to 7 on Nasdaq and by 18 to 13 on the New York Stock Exchange in heavy trading.
But investors largely chose to dump the stocks that have already suffered severely--namely tech. Meanwhile, gains in shares of companies in such industries as paper, energy and home building suggested investors are betting that the Fed is doing enough rate cutting to ensure the economy revives sooner than later.
Among Tuesday’s highlights:
* Investors took few prisoners in the tech sector. Major losers included Intel, down $2.44 to $24.63, its lowest since 1998; IBM, down $4.30 to $88.30; PMC-Sierra, down $5.06 to $30; Vitesse Semiconductor, down $7.81 to $33.50; BEA Systems, off $3 to $31.63; and Extreme Networks, down $3.68 to $18.89.
* Biotech shares also were sharply lower. The Amex biotech index dived 7.5%.
* Among financial issues, Citigroup fell $2 to $44.30, Merrill Lynch slid $2.75 to $55.75 and Stilwell Financial lost $1.41 to $27.93.
* On the plus side, industrial issues gaining ground included Alcoa, up 35 cents to $36.28; International Paper, up $1.10 to $37.36; and Briggs & Stratton, up 47 cents to $40.47.
Some trucking stocks also advanced. Roadway Express jumped $1.44 to $21.63 and USFreightways rose 75 cents to $28.94.
Among home builders, KB Home gained 69 cents to $27.75 and Pulte rose $1.69 to $35.91.
* Many energy stocks also gained. Chevron rose $1.57 to $90.63 and Anadarko Petroleum surged $2.72 to $66.05.
Market Roundup: C9, 10
