Nasdaq slides; mild losses for Dow

Nasdaq slides; modest losses for Dow

By Julie Rannazzisi,
CBS.MarketWatch.com

Last Update: 5:32 PM ET Jun 12, 2000

NEW YORK (CBS.MW) — Technology stocks succumbed to a bout of profit-taking
Monday, with shares of big-cap names particularly hard hit. Blue-chip issues suffered
smaller losses in another rangebound session spent waiting for the week’s dose of economic
data.

"The market appears to be drifting ahead of this week’s economic data, which will
be the last string of numbers ahead of the Federal Open Market Committee meeting,"
said Donald Selkin, chief market strategist at Joseph Gunnar.

While investors have been encouraged by recent economic numbers portraying a
less-steamy U.S. economy, the market wants to see more positive economic news before
breaking through the upper end of its trading range, according to Barry Hyman, chief
market strategist at Ehrenkrantz King Nussbaum.

"There’s still no commitment to the market," Hyman said. And with the
earnings pre-announcement period commencing, investors need to be extra careful of where
they invest, he continued.

On Monday, an earnings warning from Citrix Systems sent the computer software sector
sharply lower as investors continued to show zero tolerance for companies revealing
earnings shortfalls. Also under the gun were Internet and semiconductor issues.

The
broader market saw nice advances in oil service shares, which came on the heels of a jump
in crude oil prices. Retail stocks remained under pressure as investors worry that a
cooler economy will slow consumer spending and hurt profits. Biotech shares were also
sharply lower.

The Dow
Industrials shed 49.85 points, or 0.5 percent, to 10,564.21. 

On the downside were shares of McDonald’s, Microsoft, Home Depot, Boeing and Wal-Mart.
Upside movers included Exxon Mobil, Philip Morris and Eastman Kodak.

McDonald’s (MCD) fell 1 1/4 to 32 5/8, extending Friday’s losses, which came on the
heels of disappointing May sales. The company received two downgrades on Monday: Bear
Stearns lowered its rating to  "neutral" from "buy" while
Robertson Stephens lowered the company to a "long-term attractive" from a "buy."

The Nasdaq
Composite ended at session lows, dropping 106.92 points, or 2.8 percent, to 3,767.92
while the Nasdaq
100 index fell 121.84 points, or 3.2 percent, to 3,638.42.

"We’re
seeing more of the same consolidation that we witnessed last week," said Bryan
Piskorowski, market analyst at Prudential Securities. The market continues to look to
economic data as well as earnings pre-announcements for direction, he said.

The Standard
& Poor’s 500 Index lost 0.8 percent while the Russell
2000 Index of small-capitalization stocks dropped 2.8 percent.

Volume was again very light, coming in at 756 million on the NYSE — the second
lightest trading day of the year — and at 1.28 billion on the Nasdaq Stock Market. Market
breadth was sharply negative on the Nasdaq, with losers pouncing on winners by 26 to 15
while advancers matched decliners on the NYSE.

Separately,
Trim Tabs reported that equity fund inflows rebounded to an estimated $15.3 billion over
the five days ended June 8 —  with U.S. funds
absorbing 91 percent of the inflows and aggressive growth funds capturing a hefty $6.6
billion. Flows early in the month are always the strongest, Trim Tabs noted. And while
stock market liquidity set a record last week, aided by a temporary slowing of new
offerings, Trim Tabs said it expects issuance will pick up in June.

Sector movers

Citrix (CTXS) plunged 46 percent, or 18 15/16 to 22 1/4, adding to Friday’s 20 percent drop,
after announcing that it expects to report revenue in the range of $105 million to $110
million versus $94.4 million in the second quarter of 1999. And the company sees
earnings-per-share in the range of 9 to 11 cents, well below the First Call estimate of 21
cents a share. The company said expansion of its core business within large enterprise
accounts and within certain markets, including Asia, is progressing more slowly than
expected. Citrix will announce final results on July 19. See
full story.

The CBOE
Computer Software ($CWX) Index, of which Citrix is a component, fell 6.2 percent. Also
feeling the heat in the software sector were shares of Microsoft (MSFT), which fell 1
15/16, or 2.8 percent, to 66 7/8.

Biotech
stocks came under pressure Monday, weighing on the performance of the Nasdaq and the
Russell 2000 indexes. Alkermes (ALKS) plunged 15 3/4, or 29 percent, to 38 1/2 on news
that Johnson & Johnson decided to terminate further development of an injectable
sustained release form of erythropoietin, which is used to treat anemia. Read
the story. Alkermes is a component of Merrill’s Biotech Holdrs (BBH), which fell
4.8 percent, as well as the Nasdaq Biotech Index ($IXBT), which also slipped 4.8
percent.

Oil
service stocks were among the few sectors seeing nice gains Monday as July
crude jumped $1.54 to $31.74, sending the Philadelphia Oil Service Index ($OSX) up
5.2 percent. Crude reached levels not seen in  three-months following weekend
comments from oil ministers suggesting there won’t be an increase in production at OPEC’s
June 21 meeting in Vienna. See
related story and view latest
commodity prices.

Deutsche
Banc Alex. Brown upgraded a string of oil firms, including Noble Drilling (NE),
Schlumberger (SLB) and Marine Drilling (MRL) —  all of which were raised to a
"strong buy" from a "market perform."  Noble put on 2 5/16 to 41
7/8 while Marine added 1 7/16 to 27 5/16.

Motorola
(MOT) shares lost 3/8 to 34 5/8. The company’s Network Solutions Sector won a $55
million contract to replace the Global System for Mobile Communication digital cellular
network in China’s Hubei province. See
full story. Separately, Altera (ALTR) and Motorola entered discussions to integrate
Motorola’s processor core technology into Altera programmable logic devices. See
story. Altera shares backpedaled 5 5/8 to 104.

Among
other semis coming under selling pressure was Micron Technology (MU), which shed 1 to
79 even after an upgrade by ING Barings to a "strong buy" from a
"hold" rating. The Philadelphia Semiconductor Index ($SOX) lost 4.7 percent.

Shares of
Corning rose 18 to 230 after the company said it expects better-than-expected earnings for
the second quarter thanks to strong demand for its optical fiber and cable and flat panel
glass products, among others. Corning (GLW) now expects to report earnings for the
second quarter in the range of 78 to 80 cents a share, which compares to the First Call
estimate of 69 cents a share. See
full story.

Among
other companies in the fiber-optic sector, JDS Uniphase added 5  to 115 9/16 while
SDL (SDLI) rose 11 7/8 to 261 7/8. The companies and Corning are components of Merrill
Lynch’s Broadband Holdrs (BDH), which rose 1.0 percent on Monday.

Boise Cascade (BCC) shares added 5/8 to 26 15/16 even as the company warned late
Friday of lower-than-expected second-quarter results, citing weakness in its building
products and office products units. Analysts surveyed by First Call had expected earnings
of 71 cents a share. See
story.

The Philadelphia Paper Products Index ($FPP), of which Boise Cascade is a component,
lost 1.1 percent.

Shares of Qualcomm (QCOM) added 2 5/8 to 81 11/16 on news that  China Unicom
will use the company’s third-generation CDMA wireless telecommunications system.

Shares of Linux-related companies slipped, even after IBM reinforced its
  commitment to the operating system with a number of hardware and software
initiatives to develop and install Linux solutions for customers. Red Hat (RHAT) shed
1/2 to 22 1/2, VA Linux Systems (LNUX) declined 2 to 34 while Canadian-based Corel (CORL) lost 7/16 to 4 5/16.

Shares of America Online (AOL) lost 2 1/16 to 52 11/16. The company was lowered to a
"buy" rating from a "strong buy" by Wit SoundView.

After the close Monday, Solectron (SLR) reported a profit from operations of 21
cents a share in the third-quarter, matching the First Call consensus estimate. The
company made 16 cents a share in the year-ago period. The stock ended up 9/16 to 36 ahead
of the news. See
full story.

See After
Hours for post-market trading activity.

Treasury focus

Regional
market

coverage

Government prices remained mildly higher in extremely rangebound dealings.

The 10-year
Treasury note added 10/32 to yield
6.09 percent while the 30-year
bond was up 5/32 to yield
5.88 percent. See
Bond Report.

No economic data was on
tap Monday. Tuesday will see the release of the May retail sales report, which will be
important to gauge just how active consumers were last month. A survey of economists
conducted by CBS MarketWatch.com predicts the overall figure to have
increased by 0.1 percent. See Economic
Preview, economic
calendar and forecasts and historical economic data.

In the currency arena, dollar/yen recently traded at 106.82, near flat from Friday’s
close. Euro/dollar edged up 0.1 percent to 0.9532.

Julie Rannazzisi is markets editor
for CBS.MarketWatch.com.