Tech stocks hammered as bailout fails in House
Stocks, including those of technology companies, took a beating after the House of Representatives fails to pass the government bailout of the financial sector.
This post was updated several times throughout the afternoon with more details and comments, and to reflect market changes.
Shares of technology companies took a beating on Monday as the House of Representatives failed to pass a bailout plan for the financial sector.
The House voted down the $700 billion plan, 228 to 205, with two-thirds of Republicans and a significant number of Democrats casting "no" votes.
When the dust settled at the end of the trading day on Monday, the Dow Jones index was down more than 777.68, a record point decline, with the index down nearly 7 percent from Friday. The CNET Tech index closed Monday at 1375.64, a one-day drop of more than 107 points, or nearly 7.25 percent.
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The S&P 500 Index dropped 106.46 points, or 8.8 percent, to close at 1,106.55, while the tech-heavy Nasdaq Composite Index dropped 199.61 points, or more than 9 percent, to close at 1,983.73--the first time it dipped below 2,000 since 2005.
Among the hardest hit individual stocks was Apple, which also was hit with a pair of analyst downgrades. Shares of the Mac and iPhone maker closed at $105.26, down $22.98 or almost 18 percent. Also hard-hit were the stocks of chipmaker AMD, which was down nearly 17 percent percent, while Google dropped more than 11 percent to close at $381.
Bellwethers such as Hewlett-Packard, Intel, and Microsoft were all off more than 5 percent. One of the narrowest percentage losses was IBM, which was still off more than 4 percent, to $114.46
Longtime technology analyst Ashok Kumar, of brokerage Collins Stewart, said the macroeconomic concerns will weigh heavily on the technology industry, which is still perceived as a discretionary expenditure for both consumers and businesses.
"Until these clouds clear everybody is going to be in a bunker mentality," he said. "The hope is that six months out or nine months out the clouds have cleared.... but near term obviously the outlook is extremely cloudly."
Popular sentiment on Wall Street, he said, is that the government's inaction amounts to "rearranging the deck chairs on the Titanic."
Microsoft, Google, Intel and Yahoo representatives all declined to comment on the market plunge. An Apple representative was not immediately available for comment.
Members of Congress left Monday without scheduling any sort of re-vote, as many aides and lawmakers headed out early for the Jewish New Year, which begins at sundown. A revised bill or new vote could come later in the week, pundits said.
With no bill to tout, Congressional leaders shifted to the blame game. Minority leader John Boehner, the Ohio Republican, expressed frustration that the bill didn't pass, but shifted blame to the Democrats.
"Congress has failed to act," Boehner said. "I do believe that we could have gotten there today, had it not been for the partisan speech that the speaker (Nancy Pelosi) gave today."
Democrats, meanwhile, blamed Republicans.
"The administration impressed upon us the seriousness of (this crisis)," House speaker Nancy Pelosi told reporters. "We delivered on our side of the bargain. Clearly that message has not been received yet by the Republican caucus."
Pelosi, a California Democrat, said she will try and reach out to Republicans to resolve the issue.
"Where we go from here is we still have those concerns about everyday Americans," Pelosi said, referring to the reach of the credit crisis. "We want to insulate them from that. We want to protect them from that."
In a televised statement, President George W. Bush said that he was "very disappointed" in the failure of Congress to pass a bill. "We'll be working to develop a strategy that will enable us to continue to move forward," he said.
U.S. Treasury Secretary Henry Paulson later touted the bailout plan he worked on with congressional leaders as one that "gave us the tools we needed to protect the American people." He further expressed his commitment to coming up with some sort of rescue plan that works, "as soon as possible."
"We've got much to do, and this is simply too important to simply let fail," he said.
CNET News' Stephen Shankland and Daniel Terdiman contributed to this report.
The tech-heavy Nasdaq Composite Index dropped 199.61 points, or more than 9 percent, to close at 1,983.73--the first time it dipped below 2,000 since 2005.