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Nasdaq plunges
7 percentToday's 286.27-point drop in
Dow off 161.95 Star-Bulletin news services
the high-tech index brings the
'old economy' bears out of their caveNEW YORK -- The Nasdaq composite index continued its steep slide today, plummeting 286 points, or 7 percent, and closing below 4,000 for the first time since Jan. 31.
The Nasdaq, which contains many high-technology companies, is now down 5 percent in the year to date, having given back all of the 24 percent gain it had achieved as of March 10.
The index fell 286.27 points today to close at 3,769.63, its second-worst point drop in history. The 7 percent decline was the sixth worst in percentage terms.
The Dow Jones industrial average, meanwhile, fell 161.95, or 1.4 percent, to close today at 11,125.13. The blue-chip index spent most of the day in positive territory as financial stocks soared but later faltered.
The Dow is down 1.6 percent in the year to date, but has been doing better than the Nasdaq recently as investors shun "new economy" companies with little or no earnings, such as EToys Inc., for "old economy" stalwarts such as General Electric Co.
Wall Street's tech bears, deemed the losers not too long ago, are now claiming victory -- and they are doing it loudly. After being muzzled last year and at the start of 2000, the market's pessimists have begun to pipe up, celebrating their foresight.
"Six months ago, anybody with a bearish tendency was un-American. Anybody with a bearish tendency was a loser," said Scott Bleier, chief investment strategist at Prime Charter Ltd.
Now it is safe for them to come out of the cave.
As U.S. technology stocks drag the Nasdaq composite through multiple support levels in a monthlong descent from the market's peak, more cautious analysts have taken the bullhorn. They are urging investors to pull even more money out of yesterday's high fliers and jump back into the old-economy stocks.
Since the Nasdaq composite peaked at 5,048.62 on March 10, the technology-laden index is down about 25 percent.
"It seems every single analyst on the Street is on the old-economy bandwagon and determined to drive the last nail in the coffin of high-flying techs and arrogant investors," said Charles Payne, head analyst at Wall Street Strategies, an independent market research firm.
Still, the once high-flying index is 48.6 percent higher than a year ago vs. 9.4 percent gains for both the Dow and the Standard & Poor's 500 index.
Today's Nasdaq sell-off was spurred when an analyst cut his revenue estimate for Microsoft's fiscal third quarter.
Sure to add even more fuel to the tech-selling fire, a respected consulting firm released a report today that predicted most retailers operating entirely online will be out of business by next year.
Intense competition combined with an ongoing sell-off in dot-com stocks will result in a rapid rise in buyouts and bankruptcies in the coming months, according to Forrester Research Inc.
The fallout has already begun. Lawyers and consultants are getting swamped with calls for help from companies in distress.
It is quickly becoming clear that the largest and best-known sites are outpacing the pack in terms of growth in customers and sales, and the smaller players have little chance to get noticed. There are also new threats from traditional chains, such as Wal-Mart and Sears, that are stepping up their online presence.
"There are 30,000 e-tailers out there, and probably 25,000 will have to go away," said Mark Doll, a consultant for start-up companies at Ernst & Young. "But that will end up helping the biggest and best players, who can ride the tide and then will fare better because they'll have less competition in their markets."
Dow off 161.95
Star-Bulletin news servicesNEW YORK -- Major market indexes tumbled today, following the lead of the Nasdaq composite index, which lost 7 percent today.
The Nasdaq, which fell 286.27 to close at 3,769.63, was led by Microsoft Corp. after a Goldman Sachs analyst lowered his revenue estimate for the last quarter. Microsoft's woes sent a chill through the entire technology sector and demolished an early rally by the Dow Jones industrial average.
The Dow fell 161.95 to 11,125.13. Broader stock indicators also sank. The Standard & Poor's 500 fell 33.42, or 2.2 percent, to 1,467.17; the American Stock Exchange composite index lost 18.08, or 1.9 percent, to 926.79; and the Russell 2000 index of smaller companies, many of them high-tech startups, lost 16.69 points, or 3.3 percent, to close at 493.44.
Advancers barely beat decliners on the New York Stock Exchange, with 1,496 up, 1,454 down and 481 unchanged. On the Nasdaq, decliners led advancers by a 10-to-3 margin. NYSE volume totaled 1.15 billion shares vs. 972.76 million yesterday. The NYSE composite index fell 6.95, or 1 percent, to 654.25.
The Treasury's 30-year bond price was down point, or $6.25 per $1,000 in face value; its yield rose to 5.81 percent from 5.77 percent yesterday.
Microsoft, which has already seen its market value plunge as it fights antitrust charges, fell $4.50 to $79.37 today.
This morning, Goldman Sachs analyst Rick Sherlund cut his revenue estimate for the company's fiscal third quarter to $5.75 billion from $5.95 billion.
Sherlund said in a research note that personal computer sales during the quarter appear to have missed Goldman Sachs's earlier estimates. "This is a further negative for sentiment in a poor tech market," Sherlund said.