Street, Net stocks take a beating

U.S. stocks tumbled in early trading, following a plunge in the dollar and sharp losses in the European and Asian markets.

The technology-heavy Nasdaq Composite Index was taking a severe beating, plunging 87.8 points or 6 percent to 1,374.8, despite better-than-expected earnings news recently from several technology companies, including Web portal Yahoo and chipmaker Advanced Micro Devices. Other Internet stocks, including America Online and Amazon, were down as well.

The Dow Jones Industrial Average was also tanking, falling 194.4 points, or 2.5 percent, to 7,547.3.

"We are looking at another ugly day here," said Peter Cardillo, director of research at Westfalia Investments. "It's the falling dollar and world markets, which are down substantially."

Japan's Nikkei Index plunged nearly 6 percent overnight, and London's FTSE 100 was down more than 3.5 percent at midsession amid disappointment at the Bank of England's quarter-point interest rate cut. Some investors had hoped for a bigger cut.

Overnight, the dollar swooned to a 15-month low against the yen below 114. The greenback has fallen more than 16 percent this week.

To make matters worse, Federal Reserve chairman Alan Greenspan hinted that the economy was weakening and may be headed toward a recession.

Greenspan's comments yesterday did raise hope that there may be another interest rate cut to try to keep the economy on track in the face of a looming credit crunch triggered by global financial turmoil.

He added that the Fed was almost certain that the U.S. economy would slow, particularly because lenders were becoming nervous and avoiding risk, withholding capital even from solid companies who want to borrow funds.

"The uncertainties continue to increase," Cardillo said. "The market doesn't like any of this."

Reuters contributed to this report.