graphic
Markets & Stocks
Wall St. takes a beating
December 14, 2000: 4:43 p.m. ET

Renewed concern about tech revenue hurts Nasdaq; J.P. Morgan bruises Dow
By Staff Writer Catherine Tymkiw
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Once again, worries and warnings about corporate revenue growth sent U.S. stocks reeling Thursday, led by financial and technology stocks.

The beleaguered tech sector, hurt by a recent spate of results warnings, continued to feel selling pressure, sending the Nasdaq composite index sharply lower for its third straight session -- a sign that many of the tech leaders are still seen as carrying too high a price tag in a slowing economy.

Profit warnings from merging financial services partners Chase Manhattan and J.P. Morgan plunged the Dow Jones industrial average to triple digit losses.

graphic"I think there's apathy in the market," said Barry Hyman, chief market strategist at Weatherly Securities. "The cruel reality is that earnings do matter and, in the absence of any new catalyst, you're going to get days like this."

The Nasdaq deflated 94.26, or more than 3 percent, to 2,728.51. The Dow plunged 119.45 points to 10,674.99, while the S&P 500 slipped 19.06 to 1,340.93.

The Dow Transport Index fell more than 3 percent to 2,738.15 after FedEx Corp. (FDX: Research, Estimates) and United Parcel Service Inc.  (UPS: Research, Estimates) both issued profit warnings.

Positive earnings from Oracle may boost some confidence but a warning from Microsoft may send stocks on a choppy ride.

graphicInvestors may have breathed a sigh of relief that the presidential election is finally over, but acted little on the news. More than five weeks after Americans went to the polls, Vice President Al Gore conceded the presidency Wednesday night to Texas Gov. George W. Bush.

"It reaffirms the fact that it wasn't just the outcome of the election that weighed heavily on the market -- it's concern about corporate earnings and the more-than-frequent flow of profit warnings coming from some of the strong companies," said Alan Ackerman, senior vice president at Fahnestock & Co. "Earnings disappointments are overpowering the election results for now, particularly in the financial sector."

One analyst said the end of the election was one positive for a market that hates uncertainties, and it also signaled a shifting focus back onto economic fundamentals.

"I think the market is trying to find a bottom here, which is good news," Liz Ann Sonders, money manager with Campbell, Cowperthwait/US Trust, told CNNfn's Talking Stocks. "We got over one hurdle with the election and now we need to see what the Fed does."

The day's economic data appeared to have little impact on the markets. The November Producer Price Index, a measure of the price of goods at the wholesale level, came in line with expectations -- another sign that the Federal Reserve may temper its stance on inflation at its next monetary policy-making meeting on Dec. 19.

Adding a little to the stock pressure was the "triple witching" expiration of options, although analysts said this round of options expirations was having less impact than usual. Triple witching occurs when the futures market, cash market and options all expire on the same day.

  graphic OTHER CNNFN.COM STORIES  
   
  • Rx for an idyllic life
  • Putting your data online
  • Codeword: Subprime
  •    
    "I don't think there were a ton of bets placed during this particular quarter, but it does cause some wacky moves," said Art Hogan, chief market strategist with Jefferies & Co.

    Market breadth was negative. On the New York Stock Exchange, decliners beat advancers 1,715 to 1,164, as more than 1 billion shares changed hands. Losers outpaced winners on the Nasdaq 2,642 to 1,212, as more than 1.68 billion shares were traded.

    In other markets, Treasury securities edged higher. The dollar fell against the euro and was little changed versus the yen.

    Results warnings are just beginning

    With the floodgates opening to corporate warnings, the day's action on the Dow was dictated by an announcement from merging financial services companies, Chase Manhattan (CMB: Research, Estimates) and indicator component J.P. Morgan (JPM: Research, Estimates). They jointly warned that fourth-quarter profit would be lower than analysts' forecasts and around 5,000 jobs would be cut.

    Chase shares tumbled $1.53 to $42.88 while J.P. Morgan shares plunged $6.13 to $158.13.

    Other Dow financial components joined Morgan in negative territory. Citigroup (C: Research, Estimates) lost $2.25 to $50.75 and American Express (AXP: Research, Estimates) dropped $1.06 to $55.44.

    graphic"All the bad news is not out yet, and I don't know if we're going to have another round of estimate reductions because the economy seems to be falling away far faster than any of us would expect," Vince Farrell, chief investment officer at Spears Benzak Salomon & Farrell, told CNNfn's Ahead of the Curve.

    The Nasdaq's decline came against a background of ongoing concerns about softening revenue in the tech sector, signaling to investors that some of these stocks may still be overpriced.

    "The Nasdaq's weakness appears to be a continuation of the wringing out of excesses in many of the high-multiple technology stocks," said Ackerman.

    graphicInvestors may regain some confidence after Internet software maker Oracle (ORCL: Research, Estimates) reported fiscal second-quarter results after the closing bell that beat expectations. The company earned 11 cents a share, beating expectations by a penny.

    Oracle shares fell 88 cents to $27.50 before the report came out.

    But the confidence may be short-lived after Microsoft (MSFT: Research, Estimates) issued a warning after the market closed, setting up investors for another bumpy ride Friday.

    Microsoft shares fell $1.75 to $55.50.

    "This market has got problems and it's got earnings problems and it has not discounted yet," said Weatherly's Hyman. "You have to expect to be bombarded every day by more earnings warnings in technology."

      graphic THURSDAY'S MOVERS AND SHAKERS  
        Click below to see what other stocks are among the day's leaders
  • Hot Stocks
  •    
    But other tech leaders edged lower. Dell (DELL: Research, Estimates) shed 50 cents to $19.94, Worldcom (WCOM: Research, Estimates) fell 38 cents to $17.81 and Yahoo! (YHOO: Research, Estimates) tumbled $2.88 to $32.

    In the day's biggest merger development, the Federal Trade Commission on Thursday unanimously approved the proposed $111 billion merger between America Online Inc. (AOL: Research, Estimates) and Time Warner Inc. (TWX: Research, Estimates), the parent of CNNfn.com.

    Time Warner shares rose $1.90 to $74.50 while AOL shares gained $1.55 to $50.

    Robert Harrington, head of listed equity trading at UBS Warburg, told CNNfn's market coverage said the sell-off has created a tremendous buying opportunity (478K WAV) (478K AIFF).

    Eyes turn to economy

    Out of the way, finally, is the presidential election. After Gore conceded Wednesday night, the new president-elect followed Gore's speech with an address seeking to heal the breach caused by the contentious election.

    Investors are turning their attention to all the incoming economic data ahead of the Federal Reserve's policy-making meeting on Dec. 19, trying to gauge whether or not Fed chairman Alan Greenspan will move to a neutral stance on interest rates.

    "Inflation is not the problem; growth is," said Weatherly's Hyman.

    In the day's economic data, wholesale prices edged up 0.1 percent last month, the Labor Department said, in line with economists' forecasts and below October's 0.4 percent rise. The core rate, which excludes often-volatile food and energy costs, was unchanged, versus forecasts of a 0.1 percent rise and the 0.1 percent decline posted a month earlier.

    One sign that the economy may not be as weak as some fear: The number of Americans filing new claims for unemployment benefits for the week ended Dec. 9 was 320,000, down from a revised 352,000 for the week before, the U.S. Labor Department reported Thursday. Economists polled by Briefing.com had forecast claims of 355,000 for the period.

    Before the market opens Friday, the closely watched consumer price index (CPI) for November will be reported. Expectations are for the index to remain unchanged at 0.2 percent. graphic

      RELATED STORIES

    European markets - Dec. 14, 2000

    Asian markets - Dec. 14, 2000





    graphic

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.