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Wall St. rally cut short
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December 6, 2000: 5:20 p.m. ET
What a difference a day makes as stocks go from highflying to beaten-up
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - Pessimism returned to Wall Street Wednesday following a session of historic gains after a major computer maker and bank braced investors for weak financial results.
Apple Computer slashed its quarterly sales targets, igniting a sell-off in computer stocks and the chip makers that supply them. And Bank of America said earnings in the current quarter will fall short. Financial stocks tumbled.
The Nasdaq composite index, which posted a record gain Tuesday, and the Dow Jones industrial average, which saw its third-largest point surge ever that day, reversed some of those gains.
 "If you look at today, you've got to say yesterday was a sucker's rally," Timothy Ghriskey, portfolio manager at Dreyfus Corp., told CNNfn's market coverage.
The Nasdaq slipped 93.30 points, or 3.2 percent, to 2,796.50, a day after jumping a record 10.4 percent.
The reversal is nothing new. In its 29-year history, eight of Nasdaq's biggest surges came in 2000. But none have had staying power during a year when the index is down 31 percent.
The Dow fell 234.34, or 2.4 percent, to 10,664.38, hit by losses in IBM, Intel and J.P. Morgan. The day's decline wiped out more than half of the index's 338.62-point gain Tuesday.
The S&P 500, which comprises 75 percent of the market's value, fell 25.08, or 1.8 percent, to 1,351.46 and is down 8 percent this year. The losses, if they hold for three weeks, would give the index its worst annual performance since 1981, when the S&P dropped 9.7 percent.
Clark Yingst, market analyst at Prudential Securities, keeps a cautious outlook. He sees the Nasdaq rising to about 3,100 in the near term, but not much higher.
 "We think that's the best case for this advance," Yingst told CNNfn's market coverage. He sees more earnings problems plaguing the markets in the weeks ahead. (377K WAV) (377K AIFF).
More stocks fell than rose. Declining issues on the New York Stock Exchange beat advancing ones 1,690 to 1,206 on trading volume of 1.3 billion shares. Nasdaq losers topped winners 2,393 to 1,536 as more than 2.2 billion shares changed hands.
In other markets, Treasury securities rose for a second day and have strongly outperformed stocks this year. The dollar fell against the euro and the yen.
Apple loses its shine
Apple Computer (AAPL: Research, Estimates) fell $2.69, or 16 percent, to $14.31 after warning that a revenue shortfall would lead to losses of $225 million to $250 million in the current quarter. That's a sharp reversal from the $10 million in profit expected by Wall Street.
"The magnitude of the problem is what caught most people off guard," Dan Niles, who covers the company for Lehman Brothers, told CNNfn's market coverage.
Apple's latest problems come one week after Gateway (GTW: Research, Estimates), another computer maker, said its fourth-quarter earnings would be nearly half of Wall Street estimates.
Shares of Gateway lost $1.96 to $16.82 while Dell Computer (DELL: Research, Estimates) gave up $2.25 to $18.
Intel (INTC: Research, Estimates), which supplies computer makers, also fell. The big Nasdaq mover and Dow component lost $4.13 to $31.88.
 Other companies in the computer sector also slipped. Hewlett-Packard (HWP: Research, Estimates) fell $3 to $32 and IBM (IBM: Research, Estimates) gave back $6.63 to $96.75.
Financial stocks, which rose earlier Wednesday, gave up those gains after Bank of America said it expects to report earnings of 85 cents to 90 cents per share in the current quarter -- down from the First Call consensus estimate of $1.17.
Bank of America (BAC: Research, Estimates) fell $3.19 to $38 while J.P. Morgan (JPM: Research, Estimates) lost $2.75 to $148.88 and Citigroup (C: Research, Estimates) shed $1 to $49.75.
The declines come in sharp contrast to Tuesday, when stocks rallied broadly on hope that interest rates might fall next year. The optimism came after Federal Reserve Chairman Alan Greenspan in a New York speech hinted the central bank was willing to lower borrowing costs if the economy slowed dramatically.
The confluence of Greenspan's remarks and signs that the month-long presidential impasse is near an end jolted the market from a prolonged sell-off.
"The market was sensitive to any good news and it got a double whammy of it yesterday [Tuesday]," Jim Waggoner, chief market strategist at Sands Brothers & Co., told CNNfn's Before Hours.
Analysts have debated about the impact of the White House uncertainty. Some call it a legitimate selling catalyst; others insist it's an excuse. But this much is clear -- the Nasdaq is down 19 percent since Election Day.
 "I don't think it's the reason the markets are down, but I think it's a big weight around the market's neck," Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin, told CNN's Street Sweep. "It's like an anvil."
Among Wednesday's gainers, Home Depot (HD: Research, Estimates) rose $1.44 to $45.06. The home improvement retailer named Robert Nardelli, the former chief executive of General Electric's (GE: Research, Estimates) Power Systems business and one of the finalists who was passed over to succeed Jack Welch as GE's CEO, as CEO of Home Depot.
GE stock lost 19 cents to $53.94. The Environmental Protection Agency ordered the company to spend about $500,000 to dredge PCPs from parts of the Hudson River north of New York City. GE, which legally dumped the toxins over a 30-year period, said the plan will actually damage the river. 
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