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[THECANADIEN]

Nasdaq nears 27-month low
Sales warning from chipmaker Intel sends tech stocks tumbling; Dow also falls
By Staff Writer Catherine Tymkiw
March 9, 2001: 4:29 p.m. ET


NEW YORK (CNNfn) - The Nasdaq composite index tumbled to its lowest levels in almost 27 months Friday, after a sales warning from leading chipmaker Intel sparked a broad tech sell-off and a strong U.S. jobs report added to the downward pressure in the overall market.

It was definitely not a day of celebration for the tech-heavy Nasdaq, which, just one year ago, hit an all-time high of 5,048. It took only 12 months for the index to shed nearly 3,000 points, or roughly 59 percent.

"With a market as nasty and negative as it is at the moment, there`s little room for error," Alan Ackerman, senior vice president with Fahnestock & Co., said. "The Nasdaq has contracted very sharply in a short period of time. Its drop in a year is approximately 60 percent, but this is not representative of all companies that are publicly traded."

The Nasdaq composite index fell 115.88, or more than 5 percent, to 2,052.85 during Friday`s session, its lowest level since Dec. 17, 1998, when it closed at 2,043.88. For the week, the index is down 3 percent.

And, for one day at least, the Dow Jones industrial average didn`t fare much better, falling more than 200 points -- its biggest one-day point loss since mid-December.

The Dow fell 213.63, or almost 2 percent, to 10,644.62. But the blue chip index was up 1.7 percent for the week.

The Standard & Poor`s 500 index shed 31.22, or more than 2 percent, to 1,233.52 and flat for the week.

The selling came in a week of mixed reactions to bad news, but Intel`s leadership position was enough to send investors on a selling spree throughout the session.

And the strength in the jobs report raised concerns that the Federal Reserve may not be as aggressive with interest rate cuts as had been hoped.

"Negative guidance from Intel kicked off a new selling wave in beleaguered technology, while the February job figures turned out to be strong enough to raise some doubts about aggressive Federal Reserve ease," wrote Larry Wachtel, market analyst with Prudential Securities.

But analysts said investors do not need to run for the hills in a panic.

"I think stocks really are near their lows at this point and I think investors are bargain-oriented right now," said Seth Martin, equities analyst with IDEAglobal.com. "They believe in some sort of comeback by the end of this year so if you believe in that, you have to like stocks at these prices."

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers 1,987 to 1,084 as more than 1.07 billion shares were traded. Losers outpaced winners on the Nasdaq 2,678 to 994 as more than 1.98 billion shares changed hands.

Meanwhile, the dollar was flat against the yen and the euro. Treasury securities edged lower.


Intel warning rocks tech sector

Another day brought more warnings about pending technology results. Unlike earlier this week, investors weren`t willing to shrug off the bad news -- concerned about how technology stocks would hold up if the economy is slow to recover.

The negative reaction did not come as a great surprise.

"I think this is the normal response to a lack of evidence that the economy is also going to shine favorably in the tech sector," said Joe Battipaglia, chief investment strategist with Gruntal & Co. "We are in a trading range process of the worst negative expectations being played out in stock prices."

Intel (INTC: Research, Estimates), both a Dow and Nasdaq component, tumbled $3.81 to $29.44. The world`s biggest chipmaker warned again about weak sales and said it is cutting 5,000 jobs to rein in costs.

The job cuts, which represent about 6 percent of the company`s work force, are expected over the next nine months and will be mainly through attrition, Intel said.

Fahnestock`s Ackerman said investors should be wary about growth forecasts. "I think people need to be concerned about the length of the technology cycle and the inability of most CEOs and analysts to predict the course of corporate earnings over the next several quarters," he said.

Intel`s news comes one day after National Semiconductor lowered its targets for the current quarter and fiscal year ending in May. Yahoo! warned earlier this week about first-quarter results, sparking a steep drop in its stock and speculation that the Web portal company could become a takeover target.

Shares of National Semiconductor (NSM: Research, Estimates) fell $1.93 to $23.32 while Yahoo!`s (YHOO: Research, Estimates) shares shed 69 cents to $17.

Other tech leaders also fell. Microsoft (MSFT: Research, Estimates) slid $2.56 to $56.69, Dell Computer (DELL: Research, Estimates) fell $2.75 to $23.38, and Sun Microsystems (SUNW: Research, Estimates) shed $2.88 to $17.44.

In other company news, Cisco Systems (CSCO: Research, Estimates) will be joining Intel in job cutting. The networking equipment maker said roughly 16 percent of its total work force, or about 8,000 jobs, will be cut in coming weeks due to the continued slowdown in orders. Shares of Cisco fell $2.06 to $20.75.


Job creation beats expectation

With the Federal Reserve`s monetary policy-making meeting less than two weeks away, investors are zooming in on any economic data that might show what the Fed may do with interest rates.

"The real worry is that this report will limit the degree of Federal Reserve easing down the pike," William Sullivan, an economist with Morgan Stanley Dean Witter, told CNNfn`s Street Sweep.

The latest key job data may prove harmful for investor sentiment. If job creation surges in a weakening economic environment, the Fed may not be as aggressive with cutting interest rates as investors had hoped.

"I think there were still some last shreds of hope that there would be a 75 basis point (three-quarter percentage point) cut on March 20 and that has virtually been quashed," said Seth Martin, equities analyst with IDEAglobal.com. "The Fed is really interested in being incremental and they`re not interested in shocking the market."

Friday`s data showed the U.S. economy created a surprisingly large number of jobs in February, while the unemployment rate held steady at 4.2 percent, according to the Labor Department. The world`s largest economy created 135,000 jobs, surpassing Wall Street forecasts for an increase of about 75,000 jobs. The job growth eased from January`s 224,000, which was revised down from the originally reported 268,000.

The skittish sentiment about the data hurt interest-rate sensitive financial stocks. J.P. Morgan (JPM: Research, Estimates) fell $1.29 to $48.95, American Express (AXP: Research, Estimates) shed $1.70 to $42.73 and Citigroup (C: Research, Estimates) slipped $1.62 to $49.13.

[THECANADIEN]

Nasdaq`s year of pain
A year after the euphoria, technology investors face reality
By Staff Writer Jake Ulick
March 9, 2001: 12:49 p.m. ET


NEW YORK (CNNfn) - The Nasdaq composite index marks the one-year anniversary of its record high Saturday. But don`t expect a celebration.

Since peaking, the Nasdaq has tumbled 59 percent, deflating a technology stock bubble that, while it lasted, turned the market into a money machine and national pastime.

What a difference a year makes. Twelve months ago Saturday, the Nasdaq closed at 5,048.62. Its 16th record high of the year came on top of an 86 percent gain in 1999.

Today, the Nasdaq, after sliding 39.2 percent last year, is down 16 percent in 2001 and hovers at levels not seen since late 1998. Investors who once fixated on their portfolios would rather not look.

A lot has changed in twelve fast months. A once hard-charging economy slowed while investor sentiment darkened. Optimism about the growth prospects for technology companies has given way to fears about the risks of those very same firms.

Earnings and interest rates, once deemed of scant importance, now matter. For stock market bears, who once were accused of misunderstanding the new rules of a "new economy," there`s vindication.

"Euphoria can only go on for a certain amount of time," said Marc Klee, who manages the John Hancock Global Technology Fund. "Eventually reality wins out."

Recent months have brought plenty of reality. Microsoft (MSFT: Research, Estimates), Sun Microsystems (SUNW: Research, Estimates), Oracle (ORCL: Research, Estimates) and Intel (INTC: Research, Estimates), once among the most dependable of companies, all have warned that profits or sales will miss forecasts.

When the Nasdaq peaked, the U.S. economy was growing at a 5.4 percent clip. Economists now expect little if any growth for this quarter.

When the Nasdaq peaked, the Federal Reserve was raising interest rates to keep the economy from overheating. Now, the central bank is cutting rates to avoid a recession.

But changes in economic and corporate fundamentals tell just part of the story. The mania that drove tech stock valuations to levels beyond precedent has something to do with sentiment.

Consider Qualcomm. When 1999 began, the maker of wireless communications equipment traded at about $6. At the start of last year, its shares had soared above $176. Qualcomm (QCOM: Research, Estimates) now trades at $54.

"Like the Great Tulip Mania in Holland in the 1600`s and the dot.com mania of early 2000, markets have repeatedly disconnected from reality," said Tony Crescenzi, analyst at Miller, Tabak & Co.

The boom and bust cycle enforced several investing truisms. One may be the difficulty of picking the top and bottom of any market. Timing peaks and troughs is nearly impossible, caution money managers who advise taking a long-term approach to investing.

The past 12 months also underscore the value of diversifying among sectors. With technology stocks falling, drug, real estate investment trusts, utilities and food stocks all posted smart gains.

The Nasdaq`s rise and fall has been dramatic:


Just two months before it peaked, the index crossed 4,000 for the first time. But a month later, on April 12, it was back below 4,000 again.

By June 20 of last year, the Nasdaq was back above 4,000 and stayed near there until the beginning of September.

Then the bottom fell out. The Nasdaq sliced below 3,000 by early November amid the start of an eventual deluge of companies warning that profits or sales would fall short.
A year ago today, many analysts thought that technology stocks were impervious to higher interest rates. They were wrong. Technology spending, some said, would continue even if the economy cooled.

Oracle (ORCL: Research, Estimates) proved otherwise. The company last week joined hundreds of firms saying that a slowdown in business orders for its software would cause the company to miss profit expectations.

But the Nasdaq`s deflation was hardly monolithic. The Internet stocks were among the first to go, with Amazon.com (AMZN: Research, Estimates) peaking above $105 in late 1999; it now trades at $13.

Then came the infrastructure stocks. Cisco Systems (CSCO: Research, Estimates), which makes routers and switches for the Internet, saw its shares top in April last year.

But fiber-optic stocks like JDS Uniphase (JDSU: Research, Estimates) held up well through September, while data storage shares such as EMC Corp (EMC: Research, Estimates) made it until the early part of winter before falling.

The Nasdaq`s losses pale compared with some of its components. Yahoo! (YHOO: Research, Estimates) stock is down 93 percent from its peak of $237.50 reached earlier last year.

Jeremy Siegel, a professor of finance at the Wharton School, sees the year-long sell-off as a rational response to fast-weakening corporate profits. And he says the worst may not be over. "I don`t think (tech stocks) are cheap," Siegel said. "But they are closer to true value."

John Hancock`s Klee is more upbeat. While Klee calls current fundamentals "dreadful," he sees tech stocks rising modestly later this year as the economy improves. His forecasts for a Nasdaq at 3,000 by year`s end would give the index a 21 percent gain in 2001.

But that forecast still would mean a 26 percent drop over two years, a testament to last year`s big losses.

It`s only over three years that Klee`s Nasdaq 3,000 forecast for the end of 2001 looks good: a 36 percent gain.

For students of market history, the loses and gains appear rational from afar.

"The market correctly saw that the economy was going to soften in the fourth quarter," Klee said.

But that`s little comfort for the person who bought CMGI, the company with stakes in other Internet firms, at $163 a share early last year. CMGI (CMGI: Research, Estimates) now trades at $4.

[THECANADIEN]

In Memoriam: Als der Nasdaq Index bei 5000 notierte...


WALL STREET CORRESPONDENTS


Wie tief kann eine Aktie eigentlich fallen? Dumme Frage? Nun, viele Anleger glauben oder hoffen zumindest, dass der Boden bald gefunden ist. Und in der Tat, bei vielen Aktien sah es auch so aus. Da gab es Gewinnwarnungen und trotzdem stiegen die Aktien in dem Glauben, dass das Schlimmste nun überstanden sei. Gerade die Chipindustrie trumpft mit einer schlechten Meldung nach der anderen auf. Trotzdem lassen sich die Anleger noch schocken. Zum Wochenanfang sah es noch sehr gut aus. Der Dow Jones-Index schien auf Erfolgskurs zu sein. Das gab es das letzte Mal im Dezember. Der Nasdaq Index kletterte Montag, Dienstag und Mittwoch. Doch dann kamen dem Markt Warnungen von Yahoo und Intel in die Quere.

Die Yahoo-Aktie wurde den gesamten Mittwoch vom Handel ausgesetzt, von sieben Minuten am Morgen einmal abgesehen. Am Abend verkündete das Management die Nachrichten. Das weltgrößte Internetportal muss sich einen neuen Chef suchen. Tim Koogle wirft nach vielen Jahren das Handtuch. Außerdem wurde eine saftige Gewinnwarnung veröffentlicht. Im laufenden ersten Quartal wird demnach wahrscheinlich gar kein Gewinn mehr übrig bleiben. Darauf fiel die Aktie, die bereits auf dem Zweijahres-Tief notierte, noch weiter in den Keller. Aber Yahoo ist einer der großen Mitspieler auf dem Internetmarkt und wird vielleicht auch irgendwann mal wieder auf die Beine kommen.

Intel, der weltgrößte Chipproduzent, ging bisher davon aus, dass der Umsatz im laufenden Quartal nur um 15 Prozent gegenüber dem vergangenen Quartal sinken würde. Das allein gibt schon keinen Anlass zu Freudensprüngen. Nun geht das Unternehmen davon aus, dass die Umsätze um ein Viertel fallen werden. Und wenn sich eine ohnehin schon düstere Prognose noch mehr verfinstert, dann wird die Aktie eben weiter verkauft. Die Nasdaq hatte genau vor einem Jahr ihren Höchststand bei gut 5000 Punkten erreicht. Seitdem ging es steil bergab. Der Index hat rund 60 Prozent an Wert verloren.

Der Dow steht zurzeit wesentlich besser da. Abby Joseph Cohen zeigte sich in dieser Woche was das Barometer der 30-Standardwerte besonders bullisch. Mehr als gewagt ist ihre Prognose, dass der Dow Jones Index am Ende des Jahres bei 13 000 Punkten stehen könnte. Mutig, mutig. Die einflussreiche Chefstrategin des Investmenthauses Goldman Sachs empfiehlt, wieder verstärkt in Technologietitel einzusteigen. Sie rät Kleinanlegern, Papiere aus der Technologieabteilung überzugewichtet.

Die Fondsmanager haben augenblicklich sehr viel Geld zur Seite gelegt und könnten es anlegen. Teilweise floss es auch wieder in den Markt. Aber der Startschuss für eine Rally, an der dann wieder alle teilhaben wollen, wurde noch nicht gegeben.

Der Dow Jones Index hat im Wochenvergleich gut anderthalb Prozent zugelegt. Er steht jetzt bei 10 645 Punkten. Die Nasdaq fiel um gut drei Prozent auf 2053 Zähler.

HANDELSBLATT, Samstag, 10. März 2001

[baker7a7f]

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