Gloom Resumes
Reports of slowing European and domestic PC sales cast a shadow on the
technology sector Monday, as the Nasdaq shed 2.7% and closed near its lows of
the day. The Dow and S&P 500 fared somewhat better, losing just 0.5% and
1.0%, respectively.
Edginess ahead of Tuesday’s appearance before the House
Banking Committee may also have contributed to the gloomy day on Wall Street.
Volume was lighter than Friday, which suggested that for all the red on the
screen, the panic level remained under control. NYSE volume was 873
million shares while 1.45 billion shares changed hands on the Nasdaq.
Traders commented on the lack conviction in the market as well as the
breakdowns of many of the recent leadership stocks.
“Despite the breakout in Sun Microsystems
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Intel
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sector specifically are having their troubles. There are exceptions, but it’s a
group which has suddenly found that any news is bad news. That, in turn, spells
trouble,” said Frank Gretz, Market Analyst, Shields & Co.
“When you blow away estimates and can’t rally, it means there are a lot of
anxious sellers, that is, distribution. When you outright miss the estimates, it
means disaster,” he added.
According to preliminary numbers, the Nasdaq lost 113.35 to 3981.10, the Dow
sank 48.79 to 10,684.77, and the S&P 500 dropped 15.92 to 1464.27.
Top sectors were drugs
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up 3.0%, and insurance
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On the downside were software
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down 2.4%, Internets
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down 5.0%.
On news that PC sales growth was slowing, the leading box-makers took some
pretty hard hits. Dell
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lost 4 1/4 to 58 5/8, and Compaq
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Among the winners in the drug sector were Merck
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up 4.2%, and Johnson & Johnson
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In addition to Merck and Johnson & Johnson, Dow leaders included 3M
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Boeing
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Losers were Hewlett Packard
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about 4%.
“With the S&P Mid-Cap and NYSE Indexes at recent new highs, and the
S&P 500 not far behind, it would be reasonable to expect a large number of
individual stocks to also be making new highs. But the number of stocks making
new 52-week highs has hardly budged in recent months, showing no expansion
during the recent rally,” said Paul Desmond, President, Lowrey’s Reports.
“Thus, only a very select list of stocks has actually been making real
gains over the past 52 weeks. And, there is no evidence at this point that a
broadening of new highs is underway yet,” he added.
Looking ahead, the July consumer confidence numbers and the June existing
home sales reports will be released at 10:00 AM ET on Tuesday. Estimates look
for a 139.0 reading in consumer confidence and a home sales figure of 5 million
units.