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Nasdaq nose-dives
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September 21, 2000: 4:57 p.m. ET
Earnings growth, euro, energy drive selling; 3M, retailers boost Dow
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - The Nasdaq composite index erased a two-day winning streak Thursday, losing more than 60 points amid investor concerns about how the weak euro and rising energy prices will affect the revenue growth of technology companies.
"We do have a little bit of a role reversal," said Ned Riley, chief investment strategist with State Street Advisors. "The vulnerability is that (tech) stocks are priced at such levels that any disappointment leaves investors with a quick and sour taste in the mouth. Today's action reflects a little insurance being taken out that if somebody falters, it will bring the others down."
 The Nasdaq slumped 68.56 to 3,828.88. The Dow gained 77.60 to 10,765.52, while the S&P 500 fell 2.29 to 1,449.05.
Still, Goldman Sachs strategist Abby Joseph Cohen said there was no need to panic and the stock market was still looking healthy.
The Dow Jones industrial average snapped a six-session losing streak, led higher by positive earnings comments from 3M, as well as strength in retail components Home Depot and Wal-Mart Stores. But a downturn in financial issues kept the gain in check.
 "The Dow seems to be lifted because people are trying to resurrect the old growth stocks and giving them another try as a safe place to hide," said Riley. "The perception is that some of these companies are not currency- or energy-dependent enough for earnings to get hurt."
3M (MMM: Research, Estimates) rose $4.63 to $86.38 after saying it would meet earnings expectations for the second half of the year. It also expected its earnings to grow by 13 percent over the next three years.
Market breadth was negative. On the New York Stock Exchange, decliners outpaced advancers 1,731 to 1,067, as more than 1 billion shares were traded. On the Nasdaq, losers topped winners 2,423 to 1,490, as more than 1.5 billion shares changed hands.
Treasury securities rose, while the dollar fell against the euro but was little changed versus the yen. The euro continues to hover near its lifetime low.
Investors wait for end to pre-announcements
Analysts said investors are holding on to their cash until corporate pre-announcements about quarterly results stop pouring in.
"The market is very apathetic right now and that stems from the fact that we're swamped with earnings pre-announcement season," said Bryan Piskorowski, market analyst at Prudential Securities. "The same thing that gave us our rally in August is now keeping us under water, and that's a slowing economy. Does a slowing economy mean lower corporate profits, and looking at your bluest of blue chips, that's where your problem lies."
The blue chips of the tech sector took a beating.
Cisco Systems (CSCO: Research, Estimates) fell $2 to $61.13, Sun Microsystems (SUNW: Research, Estimates) shed $3.75 to $116.44, and Oracle (ORCL: Research, Estimates) lost $1 to $78.94.
 After the bell, chip maker Intel (INTC: Research, Estimates) said that its third-quarter revenue would be below the company's previous forecast. The chipmaker said it expects revenue to rise 3-to-5 percent in the third quarter from the second quarter's $8.3 billion. Intel shares closed at $61.47, down $1.59.
With oil prices hitting fresh highs almost weekly, investors have been quick to dump energy-intensive stocks amid concerns that revenue growth could be hurt.
"There are a lot of negatives out there -- the euro and energy prices -- so the trend is still lower," said Peter Coolidge, senior trader at Brean Murray & Co. "We're seeing the Dow recover somewhat with some bargain hunting, but the Nasdaq is under pressure with profit taking."
Tony Dwyer, chief market strategist at Kirlin Holdings, told CNNfn's Market Call that the anxiety in the markets is actually a positive sign for the coming months. (233K WAV) (233K AIFF).
More news from CNNfn.com for investors:
· Inheriting stocks & bonds
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Goldman Sachs' Cohen said that concerns about the weakening euro and soaring energy prices -- which sent U.S. stocks tumbling this month -- are "overdone."
In a note to clients, the influential analyst said the U.S. economy remains in good shape. She dismissed some of the fears that have helped push all the major stock indexes lower for the year.
Vice President Al Gore urged President Clinton Thursday to tap into the nation's strategic oil reserves in a bid to force down oil prices before winter. U.S. light sweet crude for November delivery fell 74 cents to $34.50 a barrel on the New York Mercantile Exchange. On Monday, crude futures hit a new 10-year high at $34.98.
Still, buyers were able to sniff out safe havens for their money, led by the battered retail sector.
Adding to the Dow's gains, Home Depot (HD: Research, Estimates) added $2.50 to $55.50 after J.P. Morgan said the home improvement retailer is on target for earnings and expects strong earnings growth. Wal-Mart (WMT: Research, Estimates) also rose, advancing $2.44 0 to $50.94.
Click here for a look at the entire retail sector
Morgan Stanley Dean Witter (MWD: Research, Estimates) tumbled $6.56 to $89.38 after it reported third-quarter profit of $1.09 a share, missing Wall Street forecasts of $1.17 a share but rising above the year-earlier profit of 83 cents a share.
Other financial stocks also fell. J.P. Morgan (JPM: Research, Estimates) shed $4.75 to $161 and Citigroup (C: Research, Estimates) lost 13 cents to $51.06.
In a week full of technology conferences and analyst meetings, investors are keen to digest any information that could signal which stocks were safe bets.
The board of AT&T (T: Research, Estimates) begins a two-day meeting amid speculation about what moves it might make to improve share price. There have been reports that the company is considering a spinoff of its long-distance business or a combination or some sort of joint venture with British Telecom (BTY: Research, Estimates). AT&T shares fell 25 cents to $29.75.
Goodyear burns out
Goodyear (GT: Research, Estimates) slid $2.88 to $18.13 after warning that it may only break even this quarter and next. The world's largest tire maker blamed rising raw material and energy costs, the declining value of the euro, weak pricing conditions worldwide and lower-than-expected volume in North America and Europe -- despite the sudden rush to replace 6.5 million recalled tires made by competitor Bridgestone/Firestone Inc.
Lehman Brothers cut its fiscal 2000 estimate for Goodyear to $1 a share from Wednesday's reduced estimate of $1.30 and also reduced its fiscal 2001 estimate to $1.60 from $2. The brokerage cited the same issues that have plagued the overall market -- a weak euro and high oil prices -- as well as low tire prices in a competitive market.
 In other auto-related news, Ford (F: Research, Estimates) fell 25 cents to $24.81 after it said it is offering to buy the 18.5 percent of Hertz (HRZ: Research, Estimates) it does not already own for $30 a share cash, or a total of about $597 million. Hertz shares rose $7.38 to $31.38. 
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