Bull Gets Hoof And Mouth
Earnings warnings from Nortel and Palm sent a chill through tech-land
Wednesday, as traders and investors dumped enough shares to leave the Nasdaq
with a loss of 6%. The weakness spread to the Dow and S&P 500 as well,
taking them down 1.6% and 2.4%, respectively.
Volume was moderate and slightly above Tuesday’s level, as 2.0 billion shares
traded on the Nasdaq and 1.3 billion shares changed hands on the NYSE.
Traders commented that the market was due for some sort of pullback given the
magnitude of the recent gain. Some also felt that portfolio managers remain
hesitant to take on big new positions as they continue to window-dress ahead of
this Friday’s end of the first quarter.
“I continue to feel that we put in a bottom last week. I’m not surprised
at the action that we are seeing today. On one small piece of the
overbought/oversold spectrum we had gotten a little overbought,” said
Gregory Nie, Senior Vice President of Technical Research, First Union
Securities.
“The five-day TRIN had gotten down to .81. The way the market had lifted
the last three days, unfolded in a fashion that I believe was going to see
another hit or two from the sell side, and of course the corporate news today
provided a convenient excuse,” he added.
According to preliminary numbers, the Nasdaq lost 118.34 to 1853.92, the Dow
fell 162.19 to 9785.92, and the S&P 500 slid 28.92 to 1153.25.
Top sectors were health care
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up 0.8%, and consumer stocks
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On the downside were telecom
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down 6.9%, computer technology
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down 12.6%.
While tech was hammered, there were some places to hide. Anheuser Busch
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gained 1.36 to 46.42 and touched highs not seen since December. Also, Adolph
Coors
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Hit hard on the Nortel news was Cisco
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on nearly double average volume of 183 million shares.
Also bruised in tech were Sun Micro
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which lost 9% each.
Dow winners were Johnson & Johnson
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up 1.5%, and Caterpillar
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5.1%, Hewlett Packard
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Looking ahead, the fourth quarter GDP report will be released on Thursday at
8:3- AM ET, and analysts expect to see a 1.1% rate.