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St. rocked by tech stocks
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December 20, 2001: 5:40 p.m. ET
U.S. stocks scale back on tech weakness stemming from Microsoft, Juniper.
By Staff Writer Alexandra Twin
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NEW YORK (CNN/Money) - Wall St. took a tech tumble Thursday as investors took in a negative forecast from networking issue Juniper, weak results from brokerages and the conclusion of the AT&T broadband deal.
The Nasdaq composite lost 64.35 points to 1,918.54, it's lowest close since December 3. The Dow Jones industrial average gave back 85.31 to 9,985.18, it's first down day in five sessions, while the Standard & Poor's 500 pulled back 9.64 to 1,139.93.
Network equipment maker Juniper (JNPR: down $4.08 to $18.85, Research, Estimates) warned fourth-quarter results will come in at 5 cents a share, missing analysts' estimates by a nickel.
In other corporate news, Comcast (CMCSK: down $2.28 to $35.79, Research, Estimates) won the battle for AT&T's (T: up $1.05 to $17.85, Research, Estimates) cable-television business Wednesday and will pay $72 billion in stock and debt. The news sent many telecommunications stocks lower.
"On any given day, the market is taking its cue from forecasts and results. Juniper was negative, so that's spilling through the Nasdaq," Douglas Altabef, analyst at Matrix Asset Advisors, told CNNfn's The Money Gang. "I think, overall, though, the trend through the rest of the year and into early next year will be more positive."
While the Dow had managed to hold up better than the Nasdaq throughout most of the day, the average dipped a little lower in late afternoon following an announcement from Microsoft of a serious security defect in Windows XP. The world's largest software maker had already been down on the general tech tumble, but fell more following the news.
A patch is available on the software maker's Web site to combat the issue. Most analysts say the defect will have no impact on the company's profitability overall, but may increase the ambivalence of investors who are unsure about upgrading to Windows XP.
On the upside, retailers were strong after Merrill Lynch issued an upgrade of a number of stores, including Federated (FD: up $2.05 to $38.30, Research, Estimates).
"We know the economy is slow and that the quarter isn't great, so these weak pre-announcements are no surprise," said John Hughes, market analyst at Shields & Co. "The trend of the last three months has been rally, go sideways, rally, go sideways, so we're just following that."
Analysts also said that seasonally speaking, late December is usually volatile.
Markets in Asia rose while European bourses closed lower Thursday. In Argentina, rioters took to the streets to protest the country's financial crisis. Treasurys were modestly higher, with the 10-year note yield at 5.06 percent. The dollar was a little stronger against both the euro and the yen.
In the day's economic news, the number of Americans filing initial jobless claims fell for the third week in a row.
Market breadth was negative. On the Nasdaq, decliners beat advancers 3-to-2 as 1.42 billion shares traded. On the New York Stock Exchange, losers beat winners by almost 2-to-1 as 2.01 billion shares changed hands.
Juniper jams, financials flail
Techs took their toll on the Nasdaq, with Juniper hurting the networking sector and chips and select telecommunications and electronic issues down as well.
Juniper's poor outlook sent a chill through the networking sector as a whole. Chips and software also dampened the techs.
The company now expects revenue between $150 million and $155 million compared with its previous estimate of $200 million.
Cisco Systems (CSCO: down $1.06 to $18.29, Research, Estimates) and Sun Microsystems (SUNW: down $0.61 to $11.85, Research, Estimates) were among stocks under pressure.
Contract electronics manufacturer Jabil Circuit (JBL: down $3.50 to $21.25, Research, Estimates) said first-quarter earnings fell more than 80 percent, as orders from computer and telecommunications companies dwindled.
Electronics industry design and testing services provider Plexus (PLXS: down $4.59 to $26.15, Research, Estimates) lowered its first-quarter earnings and revenue forecast, citing a slowdown in business.
Late Wednesday, handheld device maker Palm (PALM: up $0.14 to $3.46, Research, Estimates) said it lost 6 cents per share in the second quarter, beating estimates by a penny and giving a pop to the wireless sector Thursday, although other telecommunications companies were down on Comcast.
On a positive note, fiber optic components maker JDS Uniphase (JDSU: down $0.20 to $8.20, Research, Estimates) agreed Wednesday to buy IBM's (IBM: down $1.19 to $122.70, Research, Estimates) optical transceiver business for $340 million in cash and stock.
Financial services companies reversed some gains from Wednesday after a number of brokerages reported poor quarterly results.
Goldman Sachs (GS: down $2.10 to $92.31, Research, Estimates) reported sharply lower fourth-quarter results that nonetheless edged analysts' estimates. Lehman Bros. said profits fell 50 percent from a year ago, in line with expectations.
In addition, bank holding company and Dow component J.P. Morgan Chase (JPM: down $1.48 to $36.52, Research, Estimates) said late Wednesday that its Enron exposure was twice as bad as was originally thought. Its stake, secured by assets, stands at $965 million. The stock was the Dow's biggest loser.
Energy marketer Mirant (MIR: down $2.08 to $13.99, Research, Estimates) is cutting its capital spending by $1.5 billion in an attempt to strengthen its balance sheet.
Retailer Vans (VANS: down $2.53 to $11.45, Research, Estimates) said late Wednesday that second-quarter earnings fell 84 percent from the same period one year earlier. The company also warned that third- and fourth-quarter results will sharply miss expectations. 
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