That Sinking Feeling

September 15, 2000
Daniel Beighley

Rising oil prices, a falling euro, recession worries, and earnings fears all
combined to help stocks ignore Friday’s CPI report that showed no sign of
inflationary pressures. Stocks sank in a broad selloff that took took the Nasdaq
down 2.0%, the Dow down 1.4%, and the S&P 500 down 1.0%.

The CPI for August decreased 0.1%, which was not only lower than the 0.2% increase analysts expected, but it also marked the first monthly decrease in the
CPI since April, 1986. The core CPI came in at the expected 0.2% increase.

Volume picked up by 23% on the NYSE from Thursday’s level, as 1.23 billion
shares changed hands. Nasdaq volume increased by 3% over Thursday’s level, with
1.75 billion shares trading.

Analysts commented that the concentrated strength in the energy stocks was
not enough to fill the void left by some of the recent leaders who have pulled
back over the past two weeks.

“I think we had a mediocre Summer rally after a low was established in
May, and now we’re moving into some Fall correction. The market suffers from a
lack of leadership. We had a big rebound in technology stocks, and when that
ended it left the rest of the market foundering,” said Phil Roth, Chief
Technical Market Strategist, Morgan Stanley Dean Witter.

“In the background for stocks, I think we have a bond market that’s torn
between the positive of the perception of an economic slowdown and the negative
of the perception of increasing inflation. Despite this week’s CPI and PPI
reports, the markets are beginning to believe that higher energy prices are
impactful,” he added.

According to preliminary numbers, the Nasdaq fell 78.82 to 3835.04, the Dow
lost 160.47 to 10,927.00, and the S&P 500 slid 15.08 to 1465.79.

Looking ahead, the August new housing starts are due out Tuesday at 8:30 AM
ET, and Street estimates look for a figure of 1.54 million.

That Sinking Feeling

BUY THE FEAR, SELL THE GREED

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