Star-Bulletin news services
Nasdaq drops 2.2%
on negative reportsEconomic uncertainty
punishes the markets
NEW YORK >> Rising oil prices and disappointing forecasts for the technology sector sent stocks skidding yesterday, with pessimism over the economy further fueling the selloff. The tech-heavy Nasdaq composite index fell more than 2 percent, its biggest loss since mid-March.
A negative analyst report for tech bellwether Intel Corp. and a disappointing outlook from chip maker Conexant Systems Inc. triggered selling throughout the technology sector. Oil prices rose $1.26 to $39.65 a barrel on the New York Mercantile Exchange, adding to worries over inflation and the economy.
"My feeling is that people are really searching for some kind of a thesis for the second half, trying to figure out what will move stock prices, and we're not coming to any conclusions on that," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "The feeling is that we're one major piece of negative news away from more significant selling."
Investors were still nervous after Friday's lower-than-expected job creation figures, which led to concerns that the fast pace of economic growth was slowing. And with little economic data due this week -- and the bulk of second-quarter earnings still at least a week away -- the uncertainty quickly translated into pessimism.
The Dow Jones industrial average fell 63.49, or 0.6 percent, to 10,219.34.
Broader stock indicators fell sharply. The Nasdaq dropped 43.23, or 2.2 percent, to 1,963.43, its biggest one-day drop since March 15. The Standard & Poor's 500 index was down 9.17, or 0.8 percent, at 1,116.21.
Bond prices edged lower yesterday, with the general absence of economic news leaving the market generally flat. The price of the benchmark 10-year Treasury note declined 116 point to 102532. Its yield, which moves in the opposite direction, was unchanged from Friday at 4.47 percent. The benchmark 2-year note lost 1/32 point to 1001332, yielding 2.54 percent.
Wall Street was also concerned about Democratic presidential candidate John Kerry's selection of John Edwards as his running mate. Edwards, a trial lawyer, is seen by the conservative investment community as a proponent of the expensive class-action litigation that often plagues corporate America.
"Clearly, Edwards isn't the choice of business. But the primary question is John Kerry the choice for business?" Pears said. "The answer to that question is less clear for John Kerry, and he's the one running for president, not Edwards."
Dow component Intel dropped 22 cents to $26.11 after Lehman Brothers reduced its earnings forecast for the chip manufacturer due to lower back-to-school demand for personal computers.
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