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Wall St: A month to forget
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September 29, 2000: 4:56 p.m. ET
Quarter, week, and month end on a familiar note as stocks keep sliding
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The latest high-profile profit warning sent U.S. stocks tumbling Friday, capping a month of declines for the major indexes, which have all lost value during a year that's shaping up to be the worst in a decade.
Wall Street couldn't close the third quarter without one more major earnings blowup. It came from Apple Computer, which said it won't meet quarterly profit targets.
Apple stock fell more than 50 percent, a bigger pummeling than taken by Intel, which last week readied investors for its own revenue shortfall.
More than 60 companies this week braced analysts for financial shortcomings. And the news has taken a toll. The Nasdaq composite index, the Dow Jones industrial average and the S&P 500 have all lost value in 2000, which, if it ended today, would be the worst year for U.S. stocks since 1990.
 The Nasdaq shed 105.67 points, or 2.8 percent, to 3,672.65, bringing its loss to 3.4 percent on the week.
The Dow Jones industrial average lost 173.14 to 10,650.92, and is down 1.4 percent over the last five sessions The S&P 500 index declined 21.78 to 1,436.51, ringing in a weekly loss of 0.8 percent.
 Stocks did what they typically do in September: fall. The Dow shed 5 percent this month, the Nasdaq tumbled 12 percent and the S&P 500 declined 5.3 percent, during a historically tough four weeks in the markets.
Mac Klee, who runs the John Hancock Global Technology Fund, expects choppy trading in the short term. Still, he sees stocks rising later in October when companies start reporting results for the July-September period ended Friday.
Richard Cripps, chief market strategist, agreed. "As we go into October I do think the market will have a much better tone to it," Cripps told CNNfn's Street Sweep.
Market breadth was mixed Friday. Advancing issues on the New York Stock Exchange topped declining ones 1,460 to 1,415, on volume of more than 1.1 billion shares. But Nasdaq losers beat winners 2,174 to 1,895, as more than 1.9 billion shares changed hands.
In other markets, the dollar rose against the yen but was little changed versus the euro. Treasury securities gained.
Sliced in half
In the Nasdaq's most heavily traded stock, Apple Computer (AAPL: Research, Estimates) shed $27.75, or 51 percent, to $25.75 after saying it expects to earn between 30 cents and 33 cents per share in its fourth quarter, ending Saturday. That's well below the 45 cents per share expected by analysts. A series of brokerage downgrades followed. More than 130 million Apple shares changed hands.
Other computer makers also fell. Dell Computer (DELL: Research, Estimates) lost $2.63 to $30.81 and Gateway (GTW: Research, Estimates) shed $7 to $47.
"Clearly Apple has overshadowed everything," said John Hancock's Klee. "You still have this environment of shoot first, ask questions later."
 Intel (INTC: Research, Estimates), which supplies computer makers with chips, shed $2.88 to $41.56, bringing its loss since its revenue warning last week to 31 percent. And Microsoft (MSFT: Research, Estimates), a major provider of computer software, lost $1 to close at $60.31.
Apple wasn't the only company with disappointing news. UAL Corp. (UAL: Research, Estimates), the parent of United Airlines, said it expected to lose money in the third quarter -- well below forecasts of a 97-cent-a-share profit. The company's stock fell $2 to $42.
United helped send the Dow Jones transportation index tumbling 50.68 points, or nearly 2 percent, to 2,512.64.
More news from CNNfn.com for investors:
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Diminishing returns
After posting double-digit gains in 1999, the three major indexes are all lower for the year. The last year the Nasdaq, Dow and S&P 500 all fell was 1990.
Similarly, the final day of the third quarter has been a tough three-month period to make money in U.S. stocks. The Nasdaq is off 7.4 percent in the quarter and 9.7 percent on the year. The Dow gained 1.9 percent on the quarter but is 7.3 percent lower on the year. The S&P 500, a broader market index, has held up the best. It's off 2.2 percent in 2000 and 1.2 percent for the quarter.
"October hopefully won't bad as a September," Douglass Cliggott, U.S. equity strategist at J.P. Morgan told Street Sweep. Still, Cliggott sees trouble ahead as the market confronts more evidence of a slowing economy coupled and rising inflation.
The year began with all three indexes at record highs. And stocks kept rising in March. But the Federal Reserve, ever wary about creeping inflation, raised interest rates three times this year, making it more expensive to borrow money.
With the economy now slowing, shares have fallen steadily on fears that corporate results for the July-September period will slacken. A series of blue chip companies, including Eastman Kodak (EK: Research, Estimates), Gillette (G: Research, Estimates), and J.C. Penny (JCP: Research, Estimates) all readied analysts for lower profit numbers ahead.
The negative news comes amid some of the highest oil prices in a decade, raising costs for business and consumers. The euro, meanwhile, has plunged against the dollar, cutting into earnings of multinational companies doing business overseas.
Technology stocks, the market's most expensive sector, have taken the hardest hits on fears that earnings will slow.
Tom Gallagher, head of CIBC Oppenheimer's trading desk, told CNNfn's market coverage that the market's recent volatility is tied in part to the big run-ups that the tech stocks achieved earlier this year. (424K WAV) (424K AIFF)
But with the quarter over, there's hope that most of the negative pre-announcements that spooked the markets are also over. Oil prices have eased. The dollar is somewhat weaker. And economists believe the Federal Reserve's is finished tightening credit.
 Still, investors shied away from technology Friday, and rewarded many of the companies that have done well this year. Money continued moved into in drug and financial stocks, two of the 1999's best-performing sectors. Merck (MRK: Research, Estimates) jumped $1.31 to $74.44, while Citigroup (C: Research, Estimates) rose $1.41 to $54.84. Utility stocks, another sector where investors have found safety, advanced. The Dow Jones utility index rose 1.85 points, or 0.47 percent, to 398.22.
What savings rates?
The day's key economic report from the federal government showed that workers' income rose 0.4 percent in August, above forecasts. But consumer spending climbed at a faster pace, resulting in the lowest savings rate on record.
Friday's figures point to buoyant consumer spending even as the economy has shown signs of slowing in recent months under the weight of higher interest rates.
"These data are consistent with slower but still solid economic activity," said Steven Wood, economist at Bank of America.
That said, economists expect the Fed to hold interest rates steady when it policy makers meet. 
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