Feels Like October
Oil prices, earnings worries, the euro, the Fed, recession, and even
inflation all provided ample excuses for continued selling in technology stocks
Monday, as the Nasdaq sank 2.8% to its lowest level in two months. Add
the fact that traders have seen their fair share of scary Octobers, and it is no
wonder the Nasdaq continued its downward drift. At its current level, the Nasdaq
is down 12.5% year-to-date and 30% off its early-March all-time high.
The only consolation for stocks Monday was the strength in financials, which
helped the Dow pound out a 0.5% gain and the S&P 500 to end flat for the
day.
Volume eased by about 10% from Friday’s heavy levels, as 1.76 billion shares
traded on the Nasdaq and 1.02 billion shares changed hands on the Nasdaq.
In economic news, the September Purchasing Managers Index came in at 49.9%,
which was lower than the 50.3% analysts had expected. While the PMI suggested
more economic cooling, the August construction spending figure rose a solid
1.4%, when just a 0.4% increase was expected.
“So where is the bottom and where does the selling end? While we have
been early in our optimism, it has been our experience that you never know where
an ultimate bottom is until after the market turns up from one,” said Brian
Belski, Fundamental Strategist, U.S. Bancorp/Piper Jaffray.
“Yes, we still believe the market is in a reactive mode, a trend that
will bring only more volatility as the fourth quarter unfolds. But, we believe
the third quarter earnings season that begins in earnest this week will actually
surprise some people as to its prowess,” he added.
Top-performing sectors included oil services
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integrated oils
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and banks
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Among the biggest losers were forest and paper products
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3.6%, Internets
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down 6.7%.
According to preliminary numbers, the Nasdaq sank 103.92 to 3568.90, the Dow
gained 49.21 to 10,700.13, and the S&P 500 lost less than a point to close
at 1436.23.
Among big-cap tech losers were Yahoo
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down 5.0%, Dell
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Micro
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With financials one of the few bright spots, broker dealers posted solid
gains, with Bear Stearns
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and Lehman Brothers
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Top Dow financials were J.P. Morgan
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Looking ahead, the FOMC interest rate and policy announcement is expected at
2:15 PM ET. Earlier in the day, however, traders will be looking at the new home
sales report for August which is due out at 10:00 AM ET. Analysts look for
893,000 new home sales for the month.