Scary Movie

October 3, 2000
Daniel Beighley

The Nasdaq plunged more than 150 points in the final two hours of trading
Tuesday to finish the day off by 3.2% following the Federal Reserve’s decision
to leave interest rates unchanged. The Fed also kept its policy bias tilted
toward seeing inflationary risks for the economy.

Technicians had hoped the Nasdaq would find support at 3521, but the selloff
drove the average 65 points beneath it down to 3454.70, a level the Nasdaq had
not seen since June 1.

Blue chips avoided the tech wreck, as the Dow managed a 0.2% gain and the
S&P 500 lost just 0.7%. Strength in banks and cyclicals were the few bright
spots in an otherwise dreary day for stocks.

Volume picked up by about 10% on the Nasdaq from Monday’s level, with a hefty
1.93 billion shares changing hands. NYSE volume edged upward by 6%, as 1.09
billion shares traded.

In other economic news, new home sales for August came in at the as-expected
figure of 893,000, and that supports the idea that while the economy remains
strong, inflation still remains under control..

“It’s a relatively quiet day. The market is still absorbing many of the pre-announcements that have taken place over the last two weeks.
It’s still looking for some type of direction,” said Brian Conroy, Head of Listed Trading,
J.P. Morgan.

“The encouraging sign is that the bank index is up nicely from its lows
yesterday, but we’re still struggling for leadership in the technology stocks, so until you get the financials and the
tech stocks working together, it doesn’t feel as though we are going to see any powerful moves to the upside,”
he added.

Looking ahead, the August factory orders report is due out on Wednesday at
10:00 AM ET, and analysts look for a 1.8% increase.

Scary Movie

BUY THE FEAR, SELL THE GREED

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