Manic Monday

Worries about Intel, oil prices, the euro, and third quarter profits cast a
pall on stocks Monday, as the major averages started strong but weakened into
the close. When the dust had settled the Nasdaq had lost 1.6%, the Dow eased
0.4%, and the S&P 500 slid 0.7%. While tech was under pressure, the only
really positive aspect of the day was the strength in financials.

All eyes were on Intel
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which failed to bounce from Friday’s lows
and sank 2 9/16 or 5.8% to 45 3/8. The stock hit lows not seen since mid-January
and closed near its low of the day

Volume on the Nasdaq decreased from Friday’s level by 19%, as 1.75 billion
shares changed hands. NYSE volume eased by 17%, with 982 million shares trading.

In economic news, existing home sales for August came in at 5.27 million,
which was higher than the 4.93 million units that analysts had expected. The
figure suggests that the economy remains fairly strong despite the past year’s
rising interest rates and surging in oil prices. Most analysts, however, still
feel there is little chance of a Fed rate hike at its upcoming October 3rd
meeting.

“With regards to Intel’s news last week, in reality, it will impact all of tech. First, there is the psychological impact, even if it’s an
Intel-specific problem, that selling in one tech begets selling in the rest,”
said Frank Gretz, Market Analyst, Shields & Co.

Secondly, it’s not altogether clear that this is an Intel-specific problem. At
first glance, the problem seems to relate to a “slowdown” in Europe, the point being a slowdown for Intel isn’t likely just a slowdown for Intel. Maybe we now know why the SOX
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has gone nowhere for months,” he added.

According to preliminary numbers, the Nasdaq fell 62.49 to 3741.27, the Dow
lost 39.22 to 10,808.15, and the S&P 500 dropped 9.69 to 1439.03.

Top sectors of the day were biotechs
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, up 1.5%, banks
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up 1.4%, and broker/dealers
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, up 1.2%.

On the downside were forest and paper products
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, down 2.2%,
technology
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, 3.1%, and semiconductors
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, down 4.9%.

Joining Intel in the red for the Dow were AT&T
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, down 3.0%,
Microsoft
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, down 3.1%, Hewlett Packard
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, down 3.6%, and
Alcoa
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, down 4.5%.

Top Dow stocks that avoided the selloff were Citigroup
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, up 2.8%,
American Express
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, up 2.3%, and United technologies
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, up 2.2%.

Techs avoiding the selloff and posting big gains included CacheFlow
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up 13 27/32 to 151 1/32, Software.com
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, up 14 3/16 to 181 5/8, and
Phone.com
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, up 9 7/8 to 115 7/8.

Looking ahead, the consumer confidence numbers for September will be released
at 10:00 AM ET, and analysts expect a figure of 141.2, which is slightly higher
than the 141.2 for August.

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