Slip Sliding Away
Technology stocks tumbled Tuesday, sending the Nasdaq down 1.2% on increasing
nervousness about companies warning of third-quarter earnings shortfalls. Most
of the damage, however, was limited to tech stocks, as a rotation into
retailers, drugs, and consumer stocks held the S&P 500’s loss to just 0.4%.
The Dow eked out a 0.3% gain.
Earnings warning season started off with a bang, as PRI Automation
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said its upcoming quarter would fall short of expectations. The stock was
pummeled, falling 16 13/16 to 25 7/8, which reminded traders of how harshly the
market can react to negative earnings news.
Volume for the day increased by about 9% from Monday’s levels, with 981
million shares trading on the NYSE and 1.58 billion shares trading on the
Nasdaq.
"Right now there are a couple of concerns in the market, and that has
led to the technology stocks taking a hit. They had a nice rally to about 4200,
but since then you’ve seen earnings revisions and downward forecasts for PCs and
chips," said Barry Berman, Managing Director of Equity Research, Robert W.
Baird & Co.
"And now this week is triple witch, and people are going to start
looking at the end-of-the-quarter portfolio adjustments. We’re also getting into
the pre-announcement season, so I think the market’s just going to have a tough
time here for a while," he added.
According to preliminary numbers, the Nasdaq lost 46.84 to 3849.51, the
S&P 500 eased 5.86 to 1481.99, and the Dow added 37.74 to 11,233.23.
Top sectors of the day included retailers
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pharmaceuticals
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and transportation
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On the downside were gold and silver
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broker/dealers
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down 4.0%.
Big-cap tech losers included JDS Uniphase
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down 4.8%, Cisco
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3.2%.
Avoiding the tech decline were Qualcomm
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Juniper Networks
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Dow winners included J.P. Morgan
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3.0%, and McDonald’s
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Motors
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down 6.1%.
Looking ahead, economic news due out Thursday includes the August Producer Price Index and the August retail
sales. Consensus estimates look for a 0.1% increase in the PPI and a 0.2% increase in retail
sales.