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Markets & Stocks
Nasdaq back from an abyss
April 4, 2000: 5:54 p.m. ET

Tech stocks come back from the dead as investors seek bargains
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - U.S. stocks came back from the brink Tuesday as investors were whipsawed by conflicting signals on whether the tech bubble had burst.
    In a wild trading day, and Wall Street's busiest on record, the Nasdaq recovered nearly all of a 574-point, 13.5 percent tumble that would have been the index's biggest percentage drop in history - ahead of the 11.3 percent plunge on Oct. 19, 1987 -- Black Monday.
    The Nasdaq ended down 74.79, or 1.8 percent, to 4,148.89.
    The Dow Jones industrial average nearly emerged from its own deep hole, a 504-point drop that almost matched the tumble of October 1987. The Dow fell 57.09, or 0.5 percent, to 11,164.84.
    "We're a long way from the bottom and I think hope springs eternal for equities," Robert Stovall, market analyst at Prudential Securities, told CNNfn's market coverage.
    graphicThe Nasdaq has fallen six of the last seven sessions and is off 17 percent from its record high of 5,048 set just four weeks ago. That's well past the 10 percent dip Wall Street considers a correction.
    Analysts, citing no fresh news behind the losses, blamed the selling on the Nasdaq's own success.
    "Between October and March, the Nasdaq has almost doubled in price," said Richard Cripps, chief market strategist at Legg Mason. "Even these companies that have been cut in half are still three or four times more than they were a year ago."
    graphicThe day's action puts the closely watched indexes closer to parity then they've been in months. The Nasdaq is now up 1.9 percent this year while the Dow is off 2.8 percent.
    The broader S&P 500 shed 11.24 to 1,494.73 Tuesday.
    Far more stocks fell than rose. Declining issues on the New York Stock Exchange topped advancers 2,036 to 1,057 as trading volume reached a record 1.5 billion shares. Nasdaq losers trounced winners 3,292 to 1,099 as more than 2.8 billion shares changed hands, a record.
    
A beaten-up index lures buyers

    Analysts blamed some of the tech weakness on margin calls, in which investors, faced with losses, must sell stocks to meet their brokers' account requirements.
    The losses reached their steepest levels about two hours before the close of trading as computerized sell-programs kicked in, exacerbating the plunge. That in turn triggered buy-programs, which brought the market off it worst levels of the day.
    "A lot of program selling kicked in, especially on the S&P 500 and those quickly turned to buy orders," Art Hogan, chief market strategist at Jefferries & Co., told CNN's Street Sweep.
    Many high-flyers faltered. JDS Uniphase (JDSU: Research, Estimates) fell 4-5/8 to 107 and CMGI (CMGI: Research, Estimates) shed 11 to 89, as investors bet that that even the loftiest of growth prospects don't justify sky-high prices.
    But Larry Wachtel, market strategist at Prudential Securities, attempted to put the losses in perspective. (471K WAV)) (471K AIFF).
    Many like Wachtel, who spoke on CNNfn's market coverage, showed no signs of panic, pointing to expectations for strong corporate profits that come amid a U.S. economy now in its record 109th month of expansion.
    With first-quarter earnings season poised to begin, Vince Farrell, chief investment officer at Spears, Benzak, Salomon & Farrell, sees good news ahead for stock investors.
    "The bottom line is earnings will be good," Farrell told CNN's Street Sweep.
    Technology companies in the S&P 500 are expected to increase profits by a cumulative 26.2 percent in the first quarter, outpacing the 18.4 percent gain for the overall index, according to First Call/Thomson Financial
    And some tech names fully recovered by day's end. Intel  (INTC: Research, Estimates) gained 2-/18 to 132-3/4 and Cisco (CSCO: Research, Estimates) rose 3/16 to 73-1/8.
    Investors found a few safe places to hide -- among them bonds. Prices of fixed-income securities surged, sending the yield on the 30-year bond to its lowest levels in nearly a year. Beaten-up value stocks also drew buyers.  Procter & Gamble (PG: Research, Estimates) surged 3-15/16 to 63-7/16 and Johnson & Johnson  (JNJ: Research, Estimates) jumped 4-1/2 to 76-3/4.
    
Microsoft woes continue

    Microsoft (MSFT: Research, Estimates) fell 2-15/16 to 88-9/16, a day after a federal judge ruled the software maker violated the nation's antitrust laws.
    U.S. District Judge Thomas Penfield Jackson accused Microsoft of using its monopoly power in personal-computer operating systems to stifle competition, largely agreeing with the Justice Department and 19 states that filed the suit.
    The losses built on the 15 percent plunge the software maker suffered Monday.
    In the day's economic report, U.S. leading indicators -- meant to forecast economic activity six to nine months ahead -- fell 0.3 percent in February, according to the Conference Board, a weaker showing than Wall Street analysts had forecast. Back to top

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