Tech Rout Persists

September 11, 2000
Daniel Beighley

Worries that higher oil prices may negatively impact upcoming corporate
profits weighed heavily on technolgy stocks Monday, and that sent the Nasdaq down more
than 2.0%, bringing the Nasdaq’s decline to 7.3% since the beginning of
September. Strength in the oil patch, retailers and financials, though, helped
the Dow and S&P 500 avoid much of the selloff, as they posted losses of
0.2% and 0.3%, respectively.

Word that OPEC had agreed to increase oil production was seen by many
analysts as having little near-term impact on soaring oil prices that are
digging into the Western economies. Analysts noted that nearly every company in
the S&P 500 will likely see earnings fall because of the hike in energy
prices, and how the markets react to diminished earnings is raising some
concern.Â

Volume eased by 8% on the NYSE with 902 million shares trading while Nasdaq
volume of 1.48 billion share was just 1% below Friday’s level.

“We are heading into a high-risk period where companies will be
pre-announcing their third quarter earnings. The slowing economy is good for
liquidity because the Fed will no longer raise rates,” said Paul Rabbitt,
President, RabbittAnalytics.com.

“However, it will hurt earnings and that is unexpected at this time by
the masses. Last week several old economy companies pre-announced lower earnings
while warnings on Intel also dropped the Nasdaq. This uneasiness is just an
adjustment in psychology, but it will likely cost the averages 5-10% in the next
few months,” he added.

According to preliminary numbers, the Nasdaq fell 81.98 to 3896.43, the Dow
eased 25.16 to 11,195.49, and the S&P 500 slipped 5.24 to 1489.26.

Looking ahead, economic news due out Thursday includes the August Producer Price Index and the August retail sales.
Consensus estimates look for a 0.1% increase in the PPI and a 0.2% increase in retail
sales.

Tech Rout Persists

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources