Nasdaq Has Biggest Drop Since July--down 113 to 3455greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Nasdaq Has Biggest Drop Since July--drops 113 to 3455 By Chelsea Emery
New York, Oct. 3 (Bloomberg) -- The Nasdaq Composite Index tumbled to its biggest loss in more than two months as investors bet profit growth for software and computer companies will slow with the economy. Oracle Corp. and
I2 Technologies Inc. led the decline.
The Nasdaq wiped out a 1.4 percent gain after the Federal Reserve said the prospect of rising inflation still threatens the economy. Other benchmarks also gave up gains after the central bank's statement.
``We're facing slower profit growth and no relief from lower interest rates, and that's not good for stocks,'' said Irene O'Neill, manager of the $1.5 billion Evergreen Equity Income Fund, which has gained 14 percent this year.
The Nasdaq dropped 113.06, or 3.2 percent, to 3455.84, its largest decline since July 28 and eighth loss in nine sessions. The last time it closed lower was May 31, just a week after hitting a low for the year at 3164.55.
The Standard & Poor's 500 Index declined 9.77, or 0.7 percent, to 1426.46. DuPont Co. and Alcoa Inc. rose, lifting the Dow Jones Industrial Average 19.61, or 0.2 percent, to 10,719.74. It had been up as much as 1.5 percent before the Fed announcement.
Six stocks fell for every five that rose on the New York Stock Exchange. Some 1.1 billion shares traded on the Big Board, 13 percent more than the three-month daily average.
While Fed policy-makers, as expected, left interest rates unchanged during their final meeting before the U.S. presidential election Nov. 7, the central bank said the prospect of quickening inflation still threatens economic growth.
That statement, about 2:15 p.m. New York time, sparked stocks' selloff.
Still, shares of basic materials companies, including DuPont and Alcoa, rose as some investors bet the economy is slowing so much the Fed's next move will be to lower interest rates.
``Assuming the economic data continue to show the growth rate of the economy slowing, we'll see the Fed's tone soften and speculation mount that the next move would be to ease rather than tighten,'' said Timothy Ghriskey, a money manager for Dreyfus Corp.
DuPont rose 2.75 to 44.38, while Alcoa, which reports third- quarter profit on Thursday, gained 2.44 to 26.94. Dow Chemical Co. jumped 2 to 26.94.
Oracle, I2 Tech Fall
Oracle, I2 Technologies and Ariba Inc. fell after Richard Williams, an analyst at Jefferies & Co., cut Commerce One Inc., which also makes software to develop online marketplaces, to ``hold'' from ``accumulate. Williams said sales growth at companies in the industry may slow.
Oracle lost 9.50 to 69.25, I2 Technologies dropped 17.69 to 152.19, Ariba fell 14.58 to 112.48 and Commerce One declined 13.69 to 58.88.
Xerox Corp. sank 3.94 to 11.38 after the world's largest copier maker said it will report its first quarterly loss in 16 years.
Xerox was expected to earn 12 cents in the third quarter, the average estimate of analysts surveyed by First Call/Thomson Financial. Instead, Xerox said it lost 15 cents to 20 cents a share because of lower-than-anticipated sales. The company is expected to report earnings on Oct. 24. Corel Rises
Corel Corp., the Canadian maker of the WordPerfect software program, jumped 3.30 to 8.85 after Microsoft Corp. said it will invest $135 million in the company. Corel rose as high as 7.31 in extended trading after the announcement yesterday.
Corel shares had fallen 76 percent this year on concern it was running out of cash.
Some stocks were active after analyst comments.
Allergan Inc. sank 7.31 to 72.25 on concern the declining euro and slowing sales growth may hurt revenue for the drugmaker.
Credit Suisse First Boston analyst David Maris said the Allergan will have lower-than-forecast sales in several business lines and revenue will be cut by the weakness in the euro. He cut his rating on the stock to ``buy'' from ``strong buy.''
Some stocks fell after companies said profit may disappoint investors.
Primus Knowledge Solutions Inc., which makes software for customer service, sank 6.13 to 4.75 after it said third-quarter revenue was less than its own estimates because of weaker-than- expected sales. Analysts at Banc of America Securities and Chase H&Q cut Primus to ``market perform'' from ``buy.''
Including today's decline, Primus shares have fallen 90 percent this year. Dset Corp. plunged 70 percent, or 14.09 to 5.84 after the provider of telecommunications-network products said it expects to report a third-quarter loss because some customers delayed orders.
The company said it's likely to report a loss of 25 cents to 34 cents a share. DSET was expected to earn 23 cents, according to the First Call.
``There's eroding sentiment out there about earnings,'' said Peter Coolidge, managing director of Nasdaq trading at Brean Murray & Co. ``If you've had all these companies warn, what does it say about earnings? The market's dubious.''
-- Carl Jenkins (Somewherepress@aol.com), October 03, 2000
Did you notice the after hours trading today? The hi-tech sell-off continues.
-- JackW (email@example.com), October 03, 2000.