Why You Can Trust CNET Tech stocks tumble on Dell comments
Stocks head south in morning trading today, with technology issues tumbling on comments about Dell Computer by an influential analyst.
The broader markets also fell after a rise in bond yields triggered fresh interest rate worries.
The Nasdaq Composite Index shed a whopping 3.12 percent, or 75 points, dropping to 2,330.55. The Dow Jones Industrial Average slipped 0.91 percent, or 84.96 points, to 9,278.5. Both indexes were returning yesterday's strong gains.
Dell slipped 7.73 percent after BancBoston Robertson Stephens analyst Daniel Niles blamed lower average selling prices for personal computers for the company's "soft" finish to the quarter. He revised his sales for Dell to $5.2 billion, below his previous $5.5 billion estimates. Dell is also facing stiff competition from its rival Compaq Computer which has expanded its direct-marketing efforts. But also caught in today's slide, Compaq dropped 3.63 percent.
"Is Dell a main reason [for the slide]? I think so," said George Rodriguez, senior vice president at Guzman & Company. "There's a lot of uncertainty there and it's hitting the technology sector."
Another reason is that bond prices were falling sharply following a cut in short-term interest rates by the Bank of Japan and supply concerns. Other technology issues suffering in early trading include Amazon.com, which fell 5.01 percent, and America Online, which shed 3.61 percent.
Web portals Yahoo, Excite, and Infoseek dropped 4.73 percent, 5.29 percent, and 1.53 percent, respectively. Lycos, which has fallen hard after its merger with USA Networks, was posting nearly a quarter percent gain.
Reuters contributed to this report.