Economic pressure squeezes techs
Technology stocks are crushed beneath a renewed wave of economic pessimism despite expectations for another interest rate cut from the Federal Reserve.
The Nasdaq composite index fell 18.35 points to 1,480.45, and the Dow Jones industrial average was off 10.73 at 8,836.83.
Economic data continued to paint a gloomy picture of consumer spending and the manufacturing sector.
The Commerce Department said personal income in August was unchanged from July, while personal spending rose 0.2 percent. Many economic observers expected stronger results. Americans also put more money into savings; the personal saving rate was 4.1 percent, the highest since it hit 4.5 percent in November 1998.
The National Association of Purchasing Management's report on manufacturing in September was more upbeat. The index dipped only slightly after August's jump to a nine-month peak.
The index also indicated that the sector was starting to recover before the Sept. 11 terrorist attacks. But now analysts are saying the index is set to dip lower as a result of the events.
"The worst sectors of the economy had probably bottomed and started to recover. However, little of that matters in the short term, as the terrorist action should push the economy into a mild recession," wrote Merrill Lynch analyst Bruce Steinberg. He added that the results don't yet fully reflect the impact of Sept. 11, and the index "should fall sharply in October."
Though weaker-than-expected reports signaled a continued slowing for the U.S. economy, they also back up hopes that the Federal Reserve will cut interest rates by 50 basis points at its meeting this Tuesday and could cut rates again this year.
Expectations for lower interest rates weren't enough to cheer investors, though.
Storage was one of technology's worst-off sectors after a report from Salomon Smith Barney predicted that revenue in the industry will be down 10 percent to 35 percent sequentially from the September quarter. Previous expectations ranged from flat revenue to 10 percent declines.
Analyst Clinton Vaughan lowered his estimates on several storage companies including Brocade Communications Systems, down $1.31, or 8 percent, to $12.90; EMC, off 65 cents, or 6 percent, to $11.10; and Veritas Software, off 13 cents to $18.31.
CNET's Storage index slipped almost 5 percent.
In other news, RSA Data Security lost $2.56, or 19 percent, to $10.90 after the company announced that its third-quarter revenue will miss estimates.
German communications company Siemens also fell, 30 cents to $38.10, following a report in the Wall Street Journal that it is in talks with Motorola to form a joint venture for their wireless infrastructure and/or handset businesses. Motorola was off 31 cents to $15.29.
Excite@Home, off a penny to 14 cents a share, announced its long-predicted bankruptcy filing Friday. The company filed for Chapter 11 and said it will sell its broadband Internet access business to AT&T for $307 million in cash. AT&T was off 25 cents to $19.02.
Among the most actively traded stocks, Intel fell 49 cents to $19.95, Oracle fell 28 cents to $11.90, Cisco Systems was off 28 cents to $11.90 and Microsoft rose 58 cents to $51.75.
AOL Time Warner lost 33 cents to $32.77, Yahoo rose 28 cents to $9.09 and Amazon.com was up 4 cents to $6.01.
Staff and Reuters contributed to this report.