Profit warnings from the likes of Gateway and Altera pushed technology stocks even lower Thursday as the Nasdaq composite shed 109 points to a 52-week low of 2,598.02 in extremely heavy trading.
The Dow Jones industrial average plunged 215 points to finish at 10,414.49.
"The sentiment for sure has been deteriorating fast in the past few months, and the bad news from Gateway didn't help much," said Stephen Gauthier, fund manager at National Bank Global Technologies Fund. "We think really the possibility of recession next year is up. Despite the New Economy thinking, tech stocks are cyclicals."
More than 2.6 billion shares changed hands on the New York Stock Exchange Thursday, the second-heaviest trading day in history.
A lot of that volume can be attributed to Gateway (GTW) which fell $10.55 to $18.95 after it issued a fourth-quarter profit warning.
At this point, it's clear the technology sector has turned bearish, primarily due to slowing corporate earnings.
It's also time to face the reality that most if not all the technology darlings of the past year were grossly overvalued.
A lot of analysts are screaming for the Federal Reserve Board to cut interest rates to spark the markets.
Other PC stocks fell in sympathy as Dell Computer (DELL) lopped off $2.56 to $19.25. Compaq (CPQ) fell $1.20 to $21.50 and Apple Computer (AAPL) lost $1.06 to finish at $16.50.
Hewlett-Packard (HWP) said that it was comfortable with first-quarter sales and earnings forecasts but it didn't help. The stock closed off $2.94 to $31.63.
But that underscores the massive capitulation that's really been taking place since mid-March.
Quite simply, investors have become spoiled by 40 percent and 50 percent year-over-year sales growth among tech leaders, a breakneck pace that even the most obnoxious bulls concede couldn't last forever.
Altera's sales warning had a similar effect in the chip sector. The PLD maker shed $2 to $33.94 while competitor Xilinx (XLNX) finished off $4 to $39.
Intel Corp. (Nasdaq: INTC) tumbled $4.63 to $38.13. Advanced Micro Devices (AMD) slid $1.88 to $15.19 and IBM (IBM) dropped $6.31 to close at $93.50.
Sluggish PC and chip sales mean slower software sales so Microsoft (MSFT) fell $7.69 to $57.38. Oracle (ORCL) managed to gain $3.63 to $26.50 after weeks of bloodletting and Sun Microsystems (SUNW) chopped off $3.69 to $76.06.
Just last week, it seemed that Microsoft would be heading the other way as the election fiasco appeared to be coming to a close. Most analysts theorized that a Bush presidency would benefit the software giant in pending and future antitrust legistlation.
But here we are heading into December and still the presidential election remains unresolved.
Whether it's just a convenient excuse or a genuine drag on the market depends upon whom you ask.
The one undeniable result of all this uncertainty is fear.
"Absolute downright fear, which is a mirror image of the greed that we saw in the first quarter," said Scott Bleier, chief investment strategist at Prime Charter Ltd. "The proverbial towel is getting throw in here."
Even significant bits of good news get lost in the carnage.
Informix Corp. (Nasdaq: IFMX) rose 97 cents to $3.69 after it confirmed that its outlook for the fourth quarter remains consistent with previous guidance.
Investors aren't used to seeing the bellwethers trading at these levels, yet they aren't quite ready to jump on the bargains.
Yahoo! (YHOO) gained 56 cents to $39.63. America Online (AOL) dropped $2.75 to $40.61 while Amazon.com (AMZN) and eBay (EBAY) fell $2.25 and $2.81 a share, respectively. CMGI (CMGI) lost 81 cents to $10.06.
All of these Internet stocks were triple-digit stocks less than eight months ago.
Tut Systems Inc. (Nasdaq: TUTS) shed $3.56 to $7/13 after it warned its fourth quarter revenue will miss estimates due to tightening in the capital markets, which have affected some of Tut's service provider customers.
Cisco Systems (CSCO) shaved off $3.81 to $47.88. Nortel Networks (NT) added $2.25 to $37.75 and Lucent Technologies (LU) trimmed 25 cents to $15.56.