Tech troubles send stocks tumbling
NEW YORK » Troubles in the technology sector pushed Wall Street's major indexes to their lowest levels since mid-May yesterday, with Apple Computer Inc. and a downgrade of Intel Corp. leading the market downward.
Investors' worries about consumer spending intensified after Apple's lower-than-expected third-quarter revenues. The market got more troubling news from Prudential's downgrade of Intel, which said the company could face disappointing revenues and margins for as long as the next year.
The company news hit an already bruised market, as it followed nasty declines on Wall Street last week. Investors are anxious about Federal Reserve interest rate hikes and high energy costs, issues that could hang over the market for months.
"There's been nothing to trigger the kind of selloff we've seen yesterday and today," said Brian Bush, director of equity research, Stephens Inc. "I don't see a logical explanation, other than just pure nervous speculation and fear."
Stocks had opened higher after Federal Reserve Chairman Alan Greenspan said in a speech that the economy was weathering the recent jump in energy prices without major disruptions.
The Dow Jones industrial average fell 36.26, or 0.35 percent, to 10,216.91.
Broader stock indicators were also lower. The Standard & Poor's 500 index fell 7.19, or 0.61 percent, to 1,177.68, while the technology-focused Nasdaq composite index fell 23.62, or 1.15 percent, to 2,037.47.
Bonds fell for a second session, with the yield on the 10-year Treasury note rising to 4.45 percent from 4.39 percent late Tuesday. The dollar was up against other major currencies and gold prices fell after hitting an 18-year high in morning trading.
Climbing oil prices exacerbated worries about energy costs. A barrel of light crude quoted climbed 59 cents to settle at $64.12 on the New York Mercantile Exchange.
"A lot of people who were hoping that when it broke $62 a barrel, it would go back to the $50s are seeing that's not happening," said Hank Herrmann, CEO, Waddell & Reed Inc.
Some investors held off on making large bets until at least Friday, when the consumer price index, a key barometer of inflation, is released by the Labor Department.
Apple beat Wall Street profit forecasts by a penny per share, but revenues came in below forecasts and iPod sales missed expectations by a wide margin. Investors worried the company's holiday sales might also disappoint.