NEW YORK (CNNfn) - The Nasdaq composite index plunged for the second straight session Tuesday and posted its second-worst point loss on record, hurt by biotechnology stocks, which crumbled after President Clinton proposed making gene mapping data public.|
The proposal by the U.S. and British governments sparked fears that free data would hurt profits in the high-flying sector.
The Nasdaq composite fell 200.19 points, or 4.1 percent, to 4,707.05, bringing its two-day loss to more than 341 points, or 6.7 percent.
"The market was doing OK until the biotechs got slammed," said Al Goldman, chief market strategist at A.G. Edwards.
The nervousness spread to other indexes. The Dow Jones industrial average shed 135.89, or 1.4 percent, to 9,811.24, paring earlier gains that pushed the gauge above the 10,000 mark.
The broader S&P 500 lost 24.47, or 1.8 percent, to 1,359.15.
More stocks fell than rose. Declining issues on the New York Stock Exchange outpaced advancing ones 1,702 to 1,288. Volume topped 1 billion shares. Nasdaq losers beat winners 2,792 to 1,501. More than 1.9 billion shares changed hands.
In other markets, the dollar fell against the yen and euro. Treasury securities rose.
Biotechs lead downward spiral
Biotech stocks have soared recently as investors chased the latest in medical breakthroughs. The Nasdaq Biotech Index jumped about 100 percent in 1999, and has gained as much as 60 percent this year.
Tuesday's gene map news jolted that trend.
"Biotech is weak and biotech has been one of the main reasons that led the Nasdaq to 5,000," said Kenneth Sheinberg, head of listed trading at SG Cowen.
The Nasdaq closed above 5,000 for the first time Thursday.
Among the losers, Human Genome Sciences (HGSI: Research, Estimates) tumbled 29-1/16 to 123-1/2, Amgen (AMGN: Research, Estimates) fell 5-3/4 to 52-1/4, Genzyme (GENZ: Research, Estimates) dropped 5-1/2 to 46-7/16, and Immunex (IMNX: Research, Estimates) lost 31-7/16 to 153-15/16.
On the NYSE, Celera Genomics (CRA: Research, Estimates) skidded 39-1/4 to 149-1/4.
As such, Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum, says now may be a buying opportunity.
"Biotechnology is not going away and if investors are looking for an entry point, this might be it," Hyman told CNNfn's Talking Stocks.
But biotech stocks weren't the only losers. Microsoft (MSFT: Research, Estimates) fell 2-7/8 to 95-1/8, Cisco Systems (CSCO: Research, Estimates) shed 4-7/16 to 131-3/4 and Intel (INTC: Research, Estimates) lost 4-1/2 to 117-7/8.
After the close of trading Oracle (ORCL: Research, Estimates) fell 1-3/4 to 77. The maker of database software posted fiscal third-quarter net income of $498 million, or 17 cents per share, beating analysts' estimates.
The markets ahead
Patrick Adams, president and portfolio manager at Choice Investment Management, told CNNfn's market coverage he sees the Dow and S&P 500, both down this year, catching up to the Nasdaq, which is still up about 16 percent year-to-date. (431K WAV) (431K AIFF)
Still, 19 of the Dow's 30 stocks fell Tuesday. The biggest losers were Hewlett-Packard (HWP: Research, Estimates), which shed 6-1/2 to 140, and Alcoa, which lost 6-13/16 to 61-1/4.
Alcoa, the world's largest aluminum company dropped after agreeing to buy aerospace industry supplier Cordant Technologies Inc. for $2.9 billion, including assumption of debt. Cordant (CDD: Research, Estimates) surged 25-1/2 to 55-1/16.
In other deals, telecommunications equipment maker Nortel Networks (NT: Research, Estimates) jumped 2-3/16 to 123-7/8 after agreeing to buy Xros, a maker of high-tech gear that helps transmit data using light, for $3.25 billion in stock.
BP Amoco (BPA: Research, Estimates) fell 7/16 to 51-1/8 after agreeing to acquire British oil and lubricants maker Burmah Castrol in a $4.7 billion cash deal. American depositary receipts of Burmah Castrol (BURMY: Research, Estimates) jumped 8 to 40.
Sears, Roebuck & Co. (S: Research, Estimates) rose 11/16 to 21-1/8 after the nation's No. 2 retailer and America Online (AOL: Research, Estimates), the nation's largest Internet service provider, announced an alliance to market each other's goods and services. AOL, which has agreed to buy Time Warner, the parent of CNNfn, gained 7/16 to 61-3/4. Time Warner (TWX: Research, Estimates) advanced 5/8 to 87-1/8.
In earnings news, Martha Stewart Living Omnimedia Inc. (MSO: Research, Estimates) lost 1/2 to 25-5/8 despite posting quarterly pro forma net income of $2.4 million, or 5 cents per diluted share, beating expectations.
The flurry of mergers lifted the market earlier Tuesday, sparking optimism of more deals to come.
Strong retail sales
Stocks early Tuesday also got a boost from the latest economic data showing U.S. retail sales rose 1.1 percent in February.
Analysts said the news shows consumers continue to spend -- bolstering expectations for strong corporate profits -- but not at a rate that will force aggressive rate hikes by the Federal Reserve.
"This tells us that inflation is in check," said Charles Payne, head analyst at Wall Street Strategies. "Even though consumers are spending, it's not reflected in the price of goods."