Tech stocks stabilize after plunge
Technology stocks stabilize somewhat after it plunged more than 25 points and failed to pick up many bargain-basement shoppers.
The Nasdaq Composite Index, which is heavily weighted with technology stocks, fluctuated between a high of 1352.48 in early morning trading to a low of 1260.98 in the afternoon, before settling at 1343.05 an hour before the market's close, down 5-3/9.
Nasdaq closed at 1348.44 yesterday, down 25.31.
Propelling the dive were two analysts' downgrades of Intel due to the stock's high valuation and Cisco's earnings report that made only a small increase over Wall Street's estimates.
The market is capitalization-weighted, so large-cap companies like Intel and Microsoft can sway the index greatly when their stock rises or falls.
"Whether yesterday's decline was a buying opportunity has yet to be seen. On a historical basis, past declines have seen people jump back into the market quickly but we're not seeing people piling back in today," said Paul Saunders II, an analyst with Van Kasper & Company.
Meanwhile, David Takata, an analyst with Gruntal & Company, said investors may sit on the sidelines until there's new major news to push them back into the market.
"They're a saying that you buy on AEA and sell on H&Q," Takata joked.
The American Electronics Association's investor conference in late fall tends to push the market up as Wall Street analysts meet with the CEOs of various technology companies. But shareholders then tend to sell as the annual Hambrecht & Quist spring investor conference is held and the summer slowdown in technology businesses begins.
Despite the large drop and the market's failure to rebound, Saunders said it's no big deal when considered from a historical perspective.
"The Nasdaq started the year below 1300 and was at 800 in 1995," he said. "So the market is still quite high."
Cisco recuperated some its runoff. The stock, which closed down 4-1/8 points at 63 yesterday, was up at 63-1/2 in late afternoon trading.
Intel, however, failed to recover and slipped even further in late trading. The semiconductor giant, which closed down 7-1/2 points to 157-1/4 a share yesterday, was trading near 152 a share late today. (Intel is an investor in CNET: The Computer Network.)