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U.S. stocks slide
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February 9, 2000: 6:00 p.m. ET
Major indexes post sharp losses amid rate-hike concerns; Nasdaq loses momentum
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - U.S. stock prices fell sharply and broadly Wednesday as concerns about rising interest rates weighed on the market throughout the session.
A dismal day in the bond market also pressured equities. "It was just a nasty day all around. There was no strong leadership," said Michael Lyons, senior trader at Morgan Stanley Dean Witter.
The Dow Jones industrial average plunged 258.44 points, or 2.4 percent, to 10,699.16. The daily loss is the ninth largest in the blue-chip index's history.
 The S&P 500 index declined 30.04, or 2 percent, to 1,411.71, and the Nasdaq composite index relinquished an early gain, falling 64.26, or 1.5 percent, to 4,363.24.
Breadth was negative on the New York Stock Exchange, with losers outnumbering gainers 1,976 to 1,024 on trading volume of 1 billion shares. On the Nasdaq, losers led gainers 2,348 to 1,823, with volume of 1.78 billion shares.
Treasury prices fell sharply. The benchmark 30-year bond lost more than a full point, raising its yield to 6.31 percent from 6.23 percent late Tuesday.
The dollar fell against both the yen and the euro.
Rate hike woes
In a continuation of recent performances, concern that interest rates are set to rise further put pressure on the Dow Jones industrials and the broad-based S&P 500. Analysts said the broader market was sensitive to rising rates.
With a booming economy, the Federal Reserve increased short-term rates by a quarter percentage point last week. Many investors expect more hikes in the foreseeable future. The central bank meets again on March 21.
"There's cautiousness about the interest-rate outlook --- a bit of consolidation after very strong gains," said Alan Skrainka, chief market strategist at Edward Jones, referring to the day's decline.
"The problems are the same: Interest rates are high, and the economy is strong," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum. "It is affecting those sectors that are credit sensitive."
Many financial-services stocks suffered. The sector is highly sensitive to interest rates; higher interest rates raise the probability of borrowers defaulting on their loans and depress the demand for loans, hurting lenders' earnings.
Among the Dow components, American Express (AXP: Research, Estimates) declined 6-7/16 to 156-9/16, Citigroup (C: Research, Estimates) retreated 1-13/16 to 54-3/16, and J.P. Morgan (JPM: Research, Estimates) eased 2-15/16 to 116-9/16.
Peter Cardillo, director of research at Westfalia Investments, told CNNfn's Talking Stocks that blue-chip stocks will continue to suffer in comparison to technology issues as investors adjust to new economic conditions. (286K WAV) (286K AIFF)
Boeing (BA: Research, Estimates) also weighed on the Dow. Shares of the aerospace company fell 2 to 39 after its engineers' union failed to reach a contract agreement and walked off the job.
Keeping the Dow in check was Goodyear Tire & Rubber (GT: Research, Estimates), rising 11/16 to 22-3/4. The company reported a smaller-than-expected decline in fourth-quarter earnings.
Cisco supports the Nasdaq ...
The Nasdaq composite, firm in recent sessions, retreated Wednesday. Nevertheless, market participants did not express concern about the slide, considering the strength of its recent performance.
"It is an orderly and quiet decline," said Bill Schneider, head of block trading at Warburg Dillon Read.
Brittain Ellis, an investment strategist at Balentine & Co. in Atlanta, told CNNfn's market coverage that technology stock investors should be prepared for a jolt after the recent run-up. (270K WAV) (270K AIFF)
A gain for Cisco Systems (CSCO: Research, Estimates) prevented an even steeper loss on the Nasdaq. Cisco rose 3 to 128-13/16. The leading maker of equipment that powers the Internet late Tuesday reported better-than-expected fiscal second-quarter earnings of 25 cents a share, edging past forecasts of 24 cents. The company also announced plans for a 2-for-1 stock split. It was Wednesday's most actively traded stock on the Nasdaq.
 But Cisco's competitors had mixed fortunes. Nortel Networks (NT: Research, Estimates) advanced 3/4 to 121-3/4, while Lucent Technologies (LU: Research, Estimates) fell 1-3/8 to 52-13/16.
Robert Stovall, market strategist for Prudential Securities, told CNN's Ahead of the Curve that Cisco is giving maturity to the technology sector. (178K WAV) (178K AIFF)
The Nasdaq also benefited from a solid gain for Sun Microsystems (SUNW: Research, Estimates), a leading maker of computer products. It rose 4-9/16 to 91-9/16 after Bear Stearns increased its earnings estimate for the company for fiscal 2001.
... but Microsoft weighs
 A loss to Microsoft pressured both the Nasdaq and the Dow industrials. The software leader's shares declined 5-15/16 to 104 after the European Union announced an antitrust probe into its new $1 billion operating system. The investigation is separate from the U.S. Justice Department's antitrust case against the company.
Hacker attacks continue
Internet shares were mixed as more hacker attacks affected well-known Web sites Wednesday, including E*Trade Group's (EGRP: Research, Estimates) E*Trade brokerage and the ZDNet (ZDZ: Research, Estimates) technology information site.
The attacks follow Tuesday's blitz against eBay (EBAY: Research, Estimates), Buy.com (BUYX: Research, Estimates), Amazon.com (AMZN: Research, Estimates), and Time Warner (TWX: Research, Estimates), whose CNN.com also suffered an outage. The recent wave started Monday with an effort to jam the Yahoo! (YHOO: Research, Estimates) portal.
In the red were Amazon, falling 2-7/8 to 80-1/4, eBay, dipping 5-3/4 to 164, E*Trade, easing 1-1/8 to 21-7/8, Time Warner slipping 11/16 to 84-1/2 and Yahoo!, retreating 10-13/16 to 362-5/16. But Buy.com jumped 2-3/8 to 27-1/2 and ZDNet rose 1/8 to 33-1/4.
PepsiCo (PEP: Research, Estimates) Wednesday reported fourth-quarter profit of $764 million, or 33 cents per share. Analysts surveyed by earnings tracker First Call expected 31 cents. Shares of the world's No. 2 soft-drink maker rose 11/16 to 34.
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