Nasdaq could fall below 2,000 at open

Nasdaq 2,000 risk looms

March 12, 2001: 8:23 a.m. ET

Tech-heavy index poised for drop that would test level not seen since 1998

NEW YORK (CNNfn) - The Nasdaq composite index was at risk of being further decimated Monday -- the day some of its stocks begin trading in decimals -- and could fall below the 2,000 for the first time since December 1998.

Nasdaq-100 futures fell more than 1 percent early Monday, pointing to a sharply lower open for the Nasdaq market. Standard & Poor's futures fell about 1 percent, indicating a weak start for the S&P 500 and Dow Jones industrial average.

Renewed anxiety about the outlook for technology companies -- in particular, Web portal Yahoo! (YHOO: Research, Estimates) and chipmaker Intel (INTC: Research, Estimates) -- roiled the Nasdaq late last week, turning what looked like a weekly advance into a loss. Those warnings are prone to continue over the next several weeks as the first quarter comes to an end.

The Nasdaq begins Monday's session at 2,052.78 after a falling 5.4 percent decline Friday. The index has fallen 59 percent in exactly a year since reaching its record closing high of 5,048.62.

The Dow Jones industrial average starts at 10,644.62 following a 2 percent decline Friday. The S&P 500 kicks off the session at 1,233.42 after dropping 2-1/2 percent.

Wall Street's woes continue to wail across Asia, with Tokyo's Nikkei index closing Monday at its lowest level in nearly 16 years. Besides the U.S. tech concerns, anxiety about economic reforms presented last week by the Japanese government weighed on investors' minds. Technology stocks sent European markets lower at the start of Monday trading.

Treasury prices rose early Monday, helped in part by the weakness in stocks. The 10-year note yield slipped to 4.91 percent from 4.94 percent late Friday, while the 30-year bond yield dipped to 5.30 percent from 5.32 percent. Brent oil futures fell 27 cents to $26.26 a barrel in London.

American General, the Houston-based insurer, agreed Monday to be acquired by Britain's Prudential for $26 billion in stock. Based on Friday's closing prices, the deal values American General (AGC: Research, Estimates) at $49.52 a share, 28 percent above its Friday close.

A three-member presidential emergency panel goes into effect Monday in the labor dispute between Northwest Airlines and its mechanics union. The panel will attempt to mediate the rift, barring a strike by the mechanics for 60 days. Northwest (NWAC: Research, Estimates) shares closed Friday at $22.50, down 19 cents.

Sony, whose Computer Entertainment unit makes PlayStation 2 game console, said Monday it would join forces with Toshiba and IBM in a $400 million, five-year plan to develop a new type of microprocessor. Sony's (SNE: Research, Estimates) American depository receipts lost 90 cents to $70.65 Friday. IBM (IBM: Research, Estimates) shares fell $7.18 to $99.29.

SPX, which supplies parts and services to vehicle manufacturers, agreed Monday to buy United Dominion Industries in a deal worth $1.83 billion including debt. SPX (SPW: Research, Estimates) shares finished Friday down $3.40 at $103.60. United Dominion (UDI: Research, Estimates) stock ended the session up 30 cents at $19.50.

Microsoft and Web auctioneer eBay announced an alliance to support their Internet technologies and services. The agreement is expected to increase eBay's influence beyond its mainstay Internet auction site, as it sets out a programming standard for software developers. Microsoft (MSFT: Research, Estimates) shares lost $2.56 to $56.69 Friday, while eBay's (EBAY: Research, Estimates) shares tumbled $5.12, or more than 13 percent, to $34.

Web portal Yahoo! (YHOO: Research, Estimates) Inc. agreed to settle a lawsuit with video game makers Nintendo and Electronic Arts, in which the three will work together to ensure pirated and counterfeit copies of games made by Nintendo and EA are no longer auctioned or sold over Yahoo's Web site. The companies said that under the settlement, Nintendo and EA would drop a trademark and copyright infringement suit against Yahoo!

Shares of Yahoo! fell 69 cents to $17 Monday. Electronic Arts (ERTS: Research, Estimates) shares shed $2.69 to $50.13.