Darlings Dumped
Weaker-than-expected revenues from optical networker Nortel
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motion widespread dumping of many of the Nasdaq darlings that had served as
leadership since the market lows in May. By the close, the Nasdaq had lost 5.5%
and finished just slightly above its lows of the day.
The selling spread beyond technology, as weakness in telecom, retailers, and
broker dealers weighed on the S&P 500, which slipped by 2.4%. The Dow
benefited somewhat from the tech washout and managed to lose just 0.6%.
Volume picked up by 12% on the Nasdaq from Tuesday’s level, as 2.16 billion
shares traded, while NYSE volume rose about 9%, with 1.29 billion shares
changing hands.
Analysts will be watching Friday’s GDP number closely for signs of a
decelerating U.S. economy, and comments from the Dallas Fed Governor indicated
that the slowing scenario for GDP will likely play out on Friday.
"I think we’re getting to a very oversold condition right here, so I’m
looking for some kind of temporary bottom in this market within the next week or
10 days," said Ricky Harrington, Technical Analyst, Wachovia Securities.
"I think we’re in a bear market, and when the rally comes it will be
extremely selective and may be concentrated in the stocks that have really been
beaten down. There are technology stocks undoubtedly that have built up big
short positions, and if you get a rally, that’s where the shorts will be
squeezed," he added.
According to preliminary numbers, the Nasdaq sank 190.31 to 3229.48, the Dow
fell 66.59 to 10,326.48, and the S&P 500 dropped 33.23 to 1364.90.
Top sectors were health care
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up 1.9%, and insurance
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On the downside were semiconductors
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down 5.2%, and Internets
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Techs under big pressure included SDL Inc.
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to 234 3/16, Applied Micro Circuits
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down 25%, Newport
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Corning
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Avoiding the Nasdaq selloff were several Internets which included Amazon
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up 2 5/16 to 31 7/8, CNET
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up 4 1/16 to 83 13/16.
Dow winners were Coke
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up 2.6%, and Johnson & Johnson
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Packard
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Looking ahead, the Employment Cost Index for the third quarter will be
released Thursday at 8:30 AM ET, and analysts look for an increase of
0.9%. Then on Friday, third quarter GDP will be out, and it is expected to cool
to a 3.4% rate.