*** DON'T SAY THIS ISN'T Y2K RELATED *** - Dow Is Off to Its Worst Start Since 1920 - Worst Start in 8 Decades -

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Sat, 12 Feb 2000, 12:46pm EST

Dow Is Off to Its Worst Start Since 1920 as Investors Focus on Technology

By Philip Boroff

Dow Gets Off to Worst Start in 8 Decades: U.S. Stocks Outlook

New York, Feb. 11 (Bloomberg) -- The Dow Jones Industrial Average is off to its worst start in eight decades.

The Dow has tumbled 9.3 percent this year, its biggest decline in a comparable period since 1920, as investors eschew many of the industrial companies in the average in favor of faster- growing computer and telecommunications shares.

Rising interest rates and the prospect that the economy could slow after a record expansion have helped pull down 25 out of the 30 members in the Dow so far this year, investors said. ``People have just walked away from many of these companies,'' said Robert Begun, a money manager at Orbitex Management in New York, which oversees $600 million.

Not since 1920's 15.5 percent decline through Feb. 11 has the Dow had such a dismal first six weeks. And this year the Dow's rout leaves it trailing the Standard & Poor's 500 5.6 percent decline. The Nasdaq Composite Index, more than four fifths of which are computer and technology companies, has risen 8 percent in 2000.

Honeywell International Inc., which reported lower-than- expected sales in the fourth quarter, is the worst performing member of the Dow average, down 27 percent. International Paper Co. and United Technology Corp., Caterpillar Inc. and Du Pont Co. are down more than 20 percent.

Three of the five Dow stocks that have gained this year are computer-related. Intel Corp. is the best performer, up 29 percent, while Hewlett-Packard Corp. is up 6.5 percent and International Business Machines Corp., 6.9 percent. ``Short-term, the Dow has a headwind against it,'' said Charles Carlson, manager of the $120 million Strong Dow 30 Value Fund, a mutual fund that invests exclusively in Dow stocks. ``Investors still want all things technology.''

Nasdaq Gains This Week

The Nasdaq Composite rose 3.6 percent this week, its fourteenth gain in 16 weeks.

The Nasdaq 100, which tracks 100 of the largest companies in the composite, Vitesse Semiconductor Corp., up 47 percent, was the biggest gainer. Last month the largest manufacturer of non-silicon telecommunications chips reported a 62 percent quarterly profit rise.

The Standard & Poor's 500 Index lost 2.6 percent for the week, with all 11 industry groups declining. Health care stocks fell the most, down 7 percent, and utilities the least, off 0.3 percent.

The companies that were among the biggest decliners included Nike Inc., dragged down 28 percent because of the threat that the closure of sporting-goods stores would sap sales. Two insurers: UnumProvident Corp. and Aetna Inc. fell 44.8 percent and 28 percent, respectively, as the companies reported disappointing fourth-quarter earnings.

Spurred by hopes for fast growing earnings among technology companies, WebMethods Inc. shares surged six-fold to 212 5/8 after the Internet software maker's $143 million initial public offering. That was the third largest gain for a U.S. company on its first day of trading.

Shares of security software makers rose after computer hackers disabled Web sites at Yahoo! Inc., E*Trade Group Inc. and others, raising concerns other sites were vulnerable. Check Point Software Technologies Ltd. rose as much as 29 percent for the week, before closing the week up 23 percent.

Economic Data

Next week investors will focus on government economic reports including housing starts on Wednesday, wholesale prices on Thursday and consumer prices on Friday for signs of fast growth that could nudge interest rates higher.

Federal Reserve Bank of New York President William McDonough is scheduled to speak Wednesday at a symposium sponsored by the Bond Market Association at the New York Fed.

The Fed funds futures contracts indicate that investors expect a quarter-point increase when the central bank's policy's setting committee meets next March 21.

While most companies have reported quarterly results, Columbia/Healthcare Corp., the largest hospital operator, is slated to announce earnings Monday. Wal-Mart Stores Inc. and Applied Materials Inc., the largest world's largest retailer and semiconductor equipment maker, respectively, are scheduled to report on Tuesday.

The most closely watched IPO will be Chordiant Software, which sells products that lets companies offer personalized marketing, sales and customer support by computer.

-- snooze button (alarmclock_2000@yahoo.com), February 12, 2000



-- ImSo (lame@prepped.com), February 12, 2000.

It isn't Y2K related.........

It was an overpriced market........so it went down. I was expecting it.......oh, I was also intelligent enough to know that it was nothing to do with Y2K though.

NEWS FLASH......Y2K is finished!!

-- Craig (craig@ccinet.ab.ca), February 12, 2000.

Say guys...Go on down and help a trucker out filling up his tanks! Y2K is just beginning, and in the areas I knew it would hit. Refining,product transfers, and pumping. Wait till the Fat Lady really gets warmed up! The song is going to be a real tear jerker my friends.

"As for me...I shall finish the Game"!


-- Shakey (in_a_bunker@forty.feet), February 12, 2000.

It isn't Y2K related.

Too many factors are involved here but some of them are the FED injecting massive amounts of liquidity into the system, investors becoming addicted to gambling in the markets, massive online broker growth, trend towards high tech companies as the solution to wealth building, higher interest rates to slow expanding economy, higher margin debt, lowest savings rate ever, massive consumer and business credit expansion, and of course much higher costs for petroleum which I will attribute to Y2K AND my list is far from complete. I don't have access to any info about the manipulation of markets that goes on behind the scenes. I will bet (actually I don't have any money left to bet) that the NASDAQ hasn't seen the last of its record highs. What if the DOW tanks to 8500 and the NASDAQ reaches 5000 - what should that mean, Y2K caused it? If anything is going to cause major, earth shaking revelations in our economy at this point, my guess is it will be greed.

-- Guy Daley (guydaley@bwn.net), February 12, 2000.

Yes, it definitely is Y2k related -- just like the fact that it snowed here last night. Both events happened in the Year 2000.

-- Mikey2k (mikey2k@he.wont.eat.it), February 12, 2000.

Receive a free Y2K newsletter on the latest glitches-THE MILLENNIUM BUG UPDATE. No obligation. Just send your name along with your e-mail address.

-- Richard Markland (newsman@bright.net), February 12, 2000.

snooze button,

Y2K or not, the stock market is going to crash HARD! I posted this numerous times last year. Certainly I was WRONG in my timing of a crash in 1999, but many *experts* were also jumping the gun, so I don't feel alone in cyberspace.

However, I'm quite alienated in my small city. Most everyone is filled with great hope and expectations that the United States of NASDAQ will soar to ever greater prosperity!

This alarms me. America's pride will cause the greatest market crash in the history of the world! I stand by these words.

-- dinosaur (dinosaur@williams-net.com), February 12, 2000.

I have learned a couple things in life: 1. Anything tied to human behavior is redundant - simply meaning history will repeat itself, over and over. 2. No one, except no one can accurately predict the future when human behavior is a prime factor.

My point is, YES, the market will crash, BUT, no one knows when.

The hardest part about predicting the future is that it has not happened yet - so we dont know who gets credit for the best guess work!

All this talk about the market is meaningless!

-- BeenAround (SoothSayer@history.repeat), February 12, 2000.

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