Nasdaq and Dow sink by triple digits
The Dow and the Nasdaq post triple-digit declines as investors continue to express their concern over the approaching earnings season and a slowing economy.
The Nasdaq composite index fell 108.71, or nearly 3 percent, to 3,726.52, and the Standard & Poor's 500 index dropped 21.30 to 1,444.51.
The Dow Jones industrial average lost 118.48 to close at 10,808.52, led by J.P. Morgan, which fell $9.06 to $165.44.
About one stock rose for every two that fell on the Nasdaq and Dow, which have lost 11 percent and nearly 4 percent, respectively, this month.
At the end of regular trading, Intel was down $1.70 at $55.81. Microsoft dropped $1.19 to $63.
Other high-profile tech stocks to lose ground included Cisco Systems, which slipped $2.69 to $60.06; Oracle, down $1.84 to $76.47; and Dell Computer, down $1.31 to $34.44.
"It's a pretty sickly looking market," said Bill Meehan, chief market analyst at Cantor Fitzgerald. "We're definitely in a period of time when the market is changing, and not for the better."
Other analysts agreed. "Overall, the market is weak," said Richard Cripps, a market strategist for Legg Mason. "Most investors, especially mutual funds, are overweighted in technology stocks, and if investors are concerned about the market, that's the group that will be trimmed."
"The (technology) group is the most vulnerable to contraction, so (investors) are going to sell the stuff that does the most damage," Cripps said.
Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray, blamed investor jitters on several factors: concerns over the strong dollar eroding sales of U.S. goods overseas, earnings preannouncement season, and fears that the market is overvalued.
Belski added that a weak euro "doesn't hurt a lot of domestic tech companies, but the bigger (technology) companies will get hurt as the economy becomes more global."
Some analysts think that the market will decline further before rebounding.
"The hope is that once we get through preannouncement season, earnings (news) will help the market rally," said Cantor Fitzgerald's Meehan, adding that current forecasts show that "earnings will not be good enough to support the market."
The CNET tech index lost 60.06 to close at 2,996.69. Losers swept winners, with 78 of the 97 stocks in the index falling, 17 rising and two remaining unchanged.
Of the 18 sectors tracked by CNET Investor, communication services companies posted the sharpest declines, falling 6 percent. Computer data storage companies were one of two sectors that showed some gains, climbing nearly 1 percent.
Among members of the CNET tech index, Knight Trading Group lost $2.38 to $34.63, and JDS Uniphase fell $5.81 to $97.81.
Despite the overall pessimism, Qualcomm managed to rise $3.56 to $69.81. First Union Securities raised the maker of wireless communications products to "strong buy" from "buy" and set a 12-month price target of $90.
Adobe Systems also rose $9.38 to $142, setting a new intraday 52-week high of $143.50 compared with a low of $47.53. The maker of publishing and graphic-design software said last week that sales will increase at least 25 percent in the fourth quarter and fiscal 2001.
Among today's largest losers, Allaire fell $7.06, or 40 percent, to $10.44. The maker of Internet software said it expects a third-quarter loss of 5 cents to 20 cents a share. The company was expected to earn 7 cents, the average estimate of eight analysts surveyed by First Call/Thomson Financial.
Extending last week's losses, PSINet shares fell $1.41, or nearly 12 percent, to $10.34. At one point, the shares dipped as low as $9.88, compared with a 52-week high of $60.93.
The Internet access provider said last week that second-half revenue will be $920 million to $960 million, less than at least one analyst expected. The company also said it will need another $600 million next year to expand its network of Web-hosting centers. PSINet's shares have fallen 42 percent this month.
Linux-related shares were swept up in today's selling. Red Hat slipped $2.06 to $19.13, and VA Linux Systems fell $5.38 to $44.13.
The Philadelphia semiconductor index fell 23.34, or 2 percent, to 951.25, led by chip-equipment maker Teradyne, which lost $4 to close at $47.88.