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Revenue woes hurt Nasdaq
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July 27, 2000: 4:46 p.m. ET
Nokia revenue warning sparks tech selling; Investors seek comfort in Dow
By Staff Writer Catherine Tymkiw
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NEW YORK (CNNfn) - The Nasdaq composite index fell for the second straight session Thursday amid further evidence that more technology companies are facing revenue slowdowns, led by negative statements from Finnish phone provider Nokia.
Negative revenue outlooks from online retailer Amazon.com, and phone service provider WorldCom, added to the 3 percent decline on the Nasdaq.
Meanwhile, buyers took comfort in "old economy" stocks, snapping up financial issues and other selected blue chip issues that appear in the Dow Jones industrial average.
 "I think people are just abandoning technology, especially when you can't count on a 'Nokia' that hasn't missed (expectations) in years," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum. "The point is that there's nothing wrong with these companies - what's wrong is that analysts were not looking at the second half of the year. What's happening now is estimates are going to come down to match the reality of the economic situation."
The Nasdaq fell 145.47, or more than 3 percent, to 3,842.25. The Dow gained 69.65 to 10,586.113. The S&P 500 slipped 2.80 to 1,449.62.
Investors will now wait for Friday's release of the second quarter gross domestic product (GDP) to confirm that the economy is slowing down and the six interest rate hikes over the past year have done their job, said analysts.
 "The intermediate background look in terms of interest rates peaking and the economy slowing to a more sustainable pace without any undue harm is slowly going to play itself out," said Hyman. "I would be very shocked if the GDP came in anywhere higher than estimates because Wall Street is already expressing its confidence that the economy is slowing down."
Market breadth was negative. On the New York Stock Exchange, decliners outpaced advancers 1,482 to 1,358, as more than 1.1 billion shares changed hands. On the Nasdaq, losers beat winners 2,879 to 1,101, as more than 1.7 billion shares were traded.
In currencies, the dollar rose against the euro and the yen.
Revenue growth woes spark selling
Warnings about the sustainability of future revenue growth unnerved investors despite corporate quarterly results mostly meeting or beating expectations. Amazon.com, WorldCom, and Nokia all warned that future revenues may slow, worrying investors that risky tech stocks may have reached their peak.
"Basically we had a lot of good earnings in technology but we also have some warnings going forward," said Peter Cardillo, director of research at Westfalia Investments.
Nokia (NOK: Research, Estimates) fell 14-11/16 to 41-1/8 after warning its third-quarter earnings would be hurt by increased development costs. The Finnish mobile phone maker posted second-quarter earnings in line with analysts' predictions of a 62 percent increase in pretax profit to 1.4 billion euros ($1.31 billion).
Amazon.com (AMZN: Research, Estimates) fell 4-11/16 to 31-3/8 after the Internet retailing bellwether reported a second-quarter loss that was smaller than analysts had expected. But the company showed a slower revenue rate growth.
 The revenue concern disappointed Wall Street. SG Cowen downgraded the stock to "buy" from "strong buy," and Robertson Stephens lowered Amazon to "attractive" from "buy", while U.S. Bancorp Piper Jaffray maintained its "buy" rating and Paine Webber maintained its "neutral" rating on the stock.
WorldCom (WCOM: Research, Estimates) shed 5-7/16 to 39-5/16 after it warned that it expected its earnings to be at the lower end of expectations for the rest of the year. The provider of long-distance phone service met second-quarter earnings forecasts, driven by strong revenue gains from data, Internet and international operations, and said it is looking at possibly splitting off its traditional long-distance business from those growth areas.
"We're starting to see that companies are starting to admit that the second half is going to be slow, so that's a lingering fear," said Art Hogan, chief market analyst at Jefferies & Co.
Investors relieved by economic data
Analysts said investors were watching the key economic data this week for signs of a slowing economy and indications that the Federal Reserve would not raise interest rates at the next meeting of its monetary policy-making body in August.
And they were rewarded when the first significant economic data -- the ECI for the second quarter -- yielded no surprises.
The Dow reaped the benefits of the benign economic data as financial issues attracted buyers. Citigroup (C: Research, Estimates) advanced 5/16 to 69-5/16, American Express (AXP: Research, Estimates) gained 2-11/16 to 58-3/4, and J.P. Morgan (JPM: Research, Estimates) rose 3/4 to 132-3/16.
"The Dow is up because of sector rotation out of the high-flying tech stocks into safer, more dependable growth stocks," said Edward Jones' Skrainka.
Other Dow gainers included Exxon Mobil (XOM: Research, Estimates), rising 3-13/16 to 79-3/4, and Johnson & Johnson (JNJ: Research, Estimates), gaining 1-5/8 to 91-7/8.
The Labor Department reported that labor costs rose 1 percent in the second quarter, matching economists' predictions and slightly below the 1.4 percent gain registered in the first quarter.
Separately, the Commerce Department reported that orders for long-lasting durable goods jumped 10 percent in June, much stronger than the 0.4 percent decline expected by economists polled by Briefing.com
Influential market analyst Abby Joseph Cohen of Goldman Sachs kept her S&P target unchanged for this year at 1,575, citing emerging signs of a slowing economy.
"The U.S. equity markets are expected to generate good, but not abnormally strong, returns in the coming months," she wrote in her market commentary. "Since April, individual share price performance has been mainly driven by fundamental factors, such as earnings momentum and relative valuation, rather than prior share price momentum."
The U.S. Commerce Department will report second quarter GDP on Friday, which is the broadest measure of goods and services provided. The Briefing.com consensus is for a 3.7 percent annual rate of growth.
Earnings roll on
 In response to other corporate results, JDS Uniphase (JDSU: Research, Estimates) slid 7-5/16 to 128-5/8, after the fiber-optic firm turned in a fiscal fourth-quarter operating profit that beat Wall Street's expectations as soaring demand for its products led to a 173 percent rise in sales.
Dow Chemical (DOW: Research, Estimates), the nation's second-largest chemical maker, shed 3/16 to 27-15/16after it reported earnings of 77 cents a share, topping Wall Street forecasts of 74 cents a share.
Texaco (TX: Research, Estimates) gained 1-11/16 to 50-5/16 after it saw its profit more than double in the second quarter to $1.17 a share, but the nation's second-largest oil company missed earnings forecasts for the period by a penny a share 
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