Slipping & Sliding
A stronger-than-expected Feb. employment report combined with worries
following an Intel profit warning Friday to churn up enough anxiety to drive the Nasdaq
down 5.3% to a new two-year low. Blue chips reversed course from recent gains
and joined the Nasdaq in the red as the Dow lost 2.0% and the S&P 500
slipped 2.5%.
Non-farm payrolls grew by 135,000 in February and the average hourly wage
increased by 0.5%, both of which were higher than expected, and unemployment
held steady at 4.2%.
Analysts had expected the unemployment rate to hold steady at 4.2%, hourly
wages to rise by 0.3%, and 88,000 new jobs to have been created. The numbers all
but doused any hope for a pre-Fed meeting rate cut.
What concerned market participants was that despite the big slide in the
Nasdaq, the volume remained relatively light as 1.99 billion shares traded on
the Nasdaq and 1.08 billion shares traded on the S&P 500. Even the VIX
showed few signs of panic as it ended up 2.89 to 29.35 after briefly brushing
above 30.
“We’re seeing a continuation of the prevailing trend. Although we heard
many analysts on TV speaking about the quality of the rallies that we saw in the
last few days, those
days gapped up strong but then closed below the open, and typically that’s a
sign of weakness in my opinion,” said Todd Gold, Technical Strategist, Gruntal
& Co.
“We have no bases to speak about in most large
technology stocks. Therefore, rallies should continue to be sold in our opinion.
We think we will continue to see lower prices here as these stocks
really need time to stabilize, and the key ingredient again is time,” he
added.
According to preliminary numbers, the Nasdaq slid 115.95 to 2052.78, the Dow
lost 213.63 to 10,644.62, and the S&P 500 declined 31.32 to 1233.42.
The few sectors that avoided negative territory were pharmaceuticals
(
$DRG.X |
Quote |
Chart |
News |
PowerRating),
up 0.4%, and health care
(
$HCX.X |
Quote |
Chart |
News |
PowerRating), up 0.2%.
On the downside were Internets
(
$GIN.X |
Quote |
Chart |
News |
PowerRating), down 5.9%, semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating),
down 7.1% and computer technology
(
$XCI.X |
Quote |
Chart |
News |
PowerRating), down 7.3%.
Of the few winners, food-related stocks showed strength, with Pepsi
(
PEP |
Quote |
Chart |
News |
PowerRating),
up 1.99 to 40.61, Krispy Kreme
(
KREM |
Quote |
Chart |
News |
PowerRating), up 1 11/16 to 79 3/16, and Wild Oats
Foods
(
OATS |
Quote |
Chart |
News |
PowerRating), up 15/16 to 9 1/4.
Dow winners avoiding trouble for the time being were Philip Morris
(
MO |
Quote |
Chart |
News |
PowerRating),
up 1.7%, Merck
(
MRK |
Quote |
Chart |
News |
PowerRating), up 1.2%, Boeing
(
BA |
Quote |
Chart |
News |
PowerRating), up 1.2%, and GM
(
GM |
Quote |
Chart |
News |
PowerRating), up
.9%. Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) was the biggest Dow loser, falling 11%.
Other big cap former gems whacked were Sun Micro
(
SUNW |
Quote |
Chart |
News |
PowerRating), down 14%, and
Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating), down 9%.
Netscape founder Marc Andreessen’s IPO of his new company LoudCloud
(
LDLC |
Quote |
Chart |
News |
PowerRating)
debuted as more as a quiet mist, as it priced at 6 and closed up just 9/64 to 6
9/64. Last year at this time, a company like LoudCloud could easily have popped
above 100.
Looking ahead, the next economic news due out is the February retail sales
which are due out Tuesday at 8:30 AM ET.