Mad Dow Disease
Selling fever continued to wreak havoc in the blue chips Wednesday as the Dow
slid another 2.4% to its lowest level since March 1999. Financials, cyclicals,
drugs, and biotechs sold off sharply as market participants again showed their
dissatisfaction with the Fed’s apparent indifference toward equities that it
showed on Tuesday.
Select technology stocks saw a bounce amid the blue chip selling, and that
helped keep the Nasdaq loss to just 1.5%. The Nasdaq and the S&P 500,
however, did slide to new 28-month lows. After holding out for so long, though,
the breakdown in the Dow left many analysts feeling that stocks are nearing a
turning point.
A slightly stronger-than expected CPI report only added to the tensions in
the market as both the CPI and its core rate came in at a 0.3% increase, which
was higher than the 0.2% increase analysts expected. While it was not a huge
jump, it did offer a hint of inflationary pressure.
Volume remained solid as 1.31 billion shares traded on the NYSE and 2.09
billion shares traded on the Nasdaq.
“They don’t feel very good, and they continue to drift lower. There is
that sense of just sort of drifting and of people just sitting on their hands,
not knowing which way to go,” said Buzzy Geduld, President, Herzog Heine
Geduld.
“I guess one of two things is going to happen. Either we’re going to
have just one big blow-off and hopefully the air gets cleared, or we’re going to
continue to drift and one day come in and they’ll be up 500, it’ll be over, and
we’ll be off to the races. Right now I have to believe that we’re a lot closer
to the bottom than to the top.”
According to preliminary numbers, the Dow sank 234.57 to 9486.19, the Nasdaq
fell 27.67 to 1829.77, and the S&P 500 lost 20.55 to 1122.07.
Top sectors were semiconductors
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up 1.3%, and computer technology
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Weakest sectors were banks
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down 4.7%, and biotechnology
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Despite the beating in the blue chips, the semis were particularly strong.
Leading the SOX were Texas Instruments
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up 4.5%, Applied Materials
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4.1%.
Also strong in tech-land was Qualcomm
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on heavier-than-average volume.
Weighing heavily on the Dow were American Express
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Morgan
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Paper
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the top Dow performer, rising a respectable 3.8%.
Looking ahead, the Index of Leading Economic Indicators for February will be
released at 10:00 AM ET, and analysts expect to see a decline of 0.2%. Also due
out are the weekly jobless claims at 8:30 AM ET.