Dow climbs 210 points; AOL loses 14 percent
Old Economy stocks push the Dow Jones industrial average sharply higher, while tech giants help pull the Nasdaq down.
The Nasdaq fell 28.74 to 2,624.53, and the Standard & Poor's 500 index climbed 10.59 to 1,322.74.
The Dow Jones industrial average jumped 210.46, or 2 percent, to 10,645.42, led by Boeing, which gained $3.63 to $68.50.
"The Nasdaq really can't get out of its own way," said Todd Clark, head of listed trading at WR Hambrecht.
Network equipment maker Cisco Systems closed down $5.23, or nearly 11 percent, to $42.94, while Sun Microsystems fell $1.88 to $28.56. The server maker set a new 52-week low of $27.81 compared with a high of $64.65. Two prominent investment banks downgraded their ratings on the technology bellwether.
"The path of least resistance is down," said Bill Meehan, chief market analyst at Cantor Fitzgerald, who added that investors still have no appetite for pricey tech stocks. "There's no compelling reason to jump head over heels into stocks that had been the leaders of the tech sector."
Despite the down day, Oracle managed to gain $3.44, or 12 percent, to $32, while Intel rose 81 cents to $33.25.
Volume on the Nasdaq topped 2.06 billion shares, with five stocks declining for every three that advanced. Volume on the New York Stock Exchange was an active 1.15 billion shares as 19 stocks rose for every 11 that fell.
Last week, the Nasdaq fell 9 percent, while the S&P 500 lost 4 percent and the Dow slipped about 3 percent.
The CNET tech index fell 50.63 to 2,166.94. Decliners led advancers, with 64 of the 97 stocks in the index falling and 33 rising.
Of the 18 sectors tracked by CNET Investor, Internet content providers posted the sharpest drops, falling 9 percent. Computer aided design/manufacturing companies were the day's largest gainers, climbing nearly 2 percent.
A warning from Time Warner helped push Internet content companies lower. The media company said slow fourth-quarter advertising sales will crimp earnings. Time Warner reduced earnings growth before interest, taxes and amortization to 11 percent for the full year 2000, from a previous estimate of 12 percent to 13 percent growth.
Time Warner also announced that it will increase its stake in high-speed Net access provider Road Runner, taking a charge of between $20 million and $40 million in connection with the deal.
Time Warner fell $9.47, or 13 percent, to $63.25, while Web portal America Online, which is acquiring the company, fell $6.72, or about 14 percent, to $42.24.
Web portal Yahoo slipped $1 to $32 and set a new 52-week low at $30.25 compared with the stock's high of $250.06 over the same period.
Internet e-tailers also took a hit. eToys fell 75 cents, or about 73 percent, to 28 cents on volume of 46.7 million shares, more than 15 times the stock's daily average of 3.1 million shares. The online toy retailer warned last week that it will significantly miss revenue expectations for the December quarter.
Fellow e-tailers Amazon.com and Priceline.com also dropped. Priceline fell 25 cents, or almost 14 percent, to $1.56. Amazon closed down $3, or almost 13 percent, to $19.88. The stock hit a new low of $18.94 compared with a high of $113 over the past 52 weeks.
Terayon Communication Systems fell $8.31, or 61 percent, to $5.25 after the maker of Internet access equipment said it expects to miss fourth-quarter revenue and earnings estimates. The company attributed the shortfall to the cancellation of orders late in the quarter and a slowdown in orders for the company's products.
Efficient Networks, also a maker of Internet access equipment, fell $3.75, or 20 percent, to $14.56.
Extreme Networks, a maker of network equipment, fell $17.31, or nearly 24 percent, to $54.94. A report by the Center for Financial Research and Analysis released late last week noted an increase in the company's inventory and a decrease in its cash flow during the first quarter, which ended in September.
"There's a big fear out there that (telecom) carrier spending is slowing down and the economy is slowing down and that this company is going to get hit," analyst Kevin Giboney of D.A. Davidson said in an interview.
Giboney believes these concerns are a little extreme in Extreme's case. He notes that the decrease in cash flow comes from an intentional increase in inventory the company mentioned beforehand in an effort to combat component shortages.
Foundry Networks, a competitor of Extreme, fell $5.44, or 14 percent, to $33.