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IBM, Intel sink Wall Street
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April 19, 2000: 5:17 p.m. ET
Investors dump Dow tech leaders on revenue concerns; Nasdaq slumps
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NEW YORK (CNNfn) - Technology stocks snapped a two-day winning streak Wednesday after financial results for IBM and Intel disappointed investors, sending both the Dow Jones industrial average and the Nasdaq composite index plunging.
"It's very focused on the Intel and IBM story today but it's a fairly flat trading day," said Barry Hyman, chief market strategist at Ehrenkrantz King Nussbaum Inc. "All we've done is gain back a little bit of the massive losses. The damage is still out there with the losses still sitting around."
 The Dow Jones industrials shed 92.46 points to end the day at 10,674.96, with IBM and Intel accounting for about two-thirds of the drop. The indicator has been unable to add to the gains from the past two sessions, when it recovered roughly 460 of the 600 points it lost during last week's selling spree.
The Nasdaq lost 87.16 points to 3,706.41, shedding more than 2 percent, as it struggled unsuccessfully to extend two days of record-setting point gains. Statistically, the two-day rally recouped 472 points, or 14 percent, lost during last week's five-session selling spree that cut the index's value by more than 1,000 points, or 34 percent. But the index is still nearly 27 percent below its March 10 high, a bear market by Wall Street's definition. The broader S&P 500 index shed 14.14 to 1,427.47.
 Market breadth was turning positive, signaling some optimism. Decliners outpaced advancers on the New York Stock Exchange by a narrow margin of 1,483 to 1,464, as more than 998 million shares changed hands. Winners beat losers on the Nasdaq, 2,360 to 1,861, as volume reached more than 1.7 billion shares.
The dollar firmed against the yen but was little changed against the euro. Treasury securities edged higher.
IBM, Intel lead the sellers
Analysts said technology firms IBM and Intel may have reported positive earnings, but both firms seemed less optimistic about revenue moving forward, inspiring a sell-off.
Investors are focusing on forward-looking statements rather than putting too much emphasis on first-quarter results that reflect only the past performance of companies.
IBM (IBM: Research, Estimates) fell 7-1/8 to 104-3/8 after posting first-quarter profit of 83 cents a share, up from both the forecast and year-earlier figures of 78 cents a share. But the company said revenue fell in the three-month period.
Intel Corp. (INTC: Research, Estimates) shed 9-15/16 to 119-1/16 after it announced first-quarter operating profit of 71 cents a share, up from the year-earlier 58 cents a share and beating the expected 69 cents a share. But the chip maker said its second-quarter revenue is expected to remain flat.
"The numbers look good, but it's two quarters in a row that analysts are skeptical about how they're reporting their numbers," said Hyman, referring to Intel adding investment gains to its profit numbers.
Cisco Systems (CSCO: Research, Estimates) slipped 3-1/16 to 66-3/16, Oracle (ORCL: Research, Estimates) fell 4-3/8 to 74-9/16, and Microsoft (MSFT: Research, Estimates) shed 1-7/8 to 78-11/16.
The world's biggest software maker will report quarterly results on Thursday. "All eyes will be on Microsoft to see where they come out based on the Goldman (Sachs) downgrading," said Hyman.
Goldman Sachs analyst Rick Sherlund, citing sluggish demand for personal computers, last week cut his forecast for Microsoft's sales to $5.75 billion for the company's fiscal third quarter ended in March, from $5.95 billion.
Holidays, options expiration slow the pace
According to analysts, Wednesday night's start of Passover, the Good Friday market closing, and options expiration are all taking away some of the volume and giving the markets some rest.
"Traders are just lightening their positions a little bit. The holidays are compressing the activity and I think most of the (options) rolling over you saw yesterday," said Hyman.
"There was some light profit-taking ahead of the (Easter and Passover) holidays. Volume is not that heavy and people are just waiting on the sidelines," agreed Peter Cardillo, research analyst at Westfalia Investments.
Analysts cautioned that investor sentiment has been little changed throughout the recent turmoil -- which could indicate another testing of the lows before the markets turn steadily positive.
"Most people will not be here tomorrow (Thursday) and light volume days tend to be 'up' days," said Joseph Barthel, chief investment strategist at Fahnestock & Co. "Today and tomorrow you would expect to see lower volume, but it will be more up than down. When there's an absence of buyers, there's an absence of sellers."
Strong earnings boost stocks
First-quarter results have been strong and buyers are stepping in as investor confidence is boosted.
 Richard Cripps, chief market analyst at Legg Mason, said Nasdaq's big sell-off took some of the most speculative froth out of the market, returning investor focus to earnings. (WAV 229K) (AIFF 229K)
"After suffering from an oversold condition, recent earnings reports have clearly benefited the bulls," wrote Bryan Piskorowski, market analyst with Prudential Securities, in a note to clients. "Putting this into perspective, one-third of the S&P 500 has reported thus far, with 72% beating the consensus estimates, while only 17% have come in below estimates. After some mixed results on the earnings front in tech, we are on the mend."
Drug maker Warner-Lambert Co. (WLA: Research, Estimates) gained 6-7/8 to 114-3/8, after reporting first-quarter earnings of 58 cents a share, up from the forecast 56 cents a share and beating last year's 43 cents a share.
Pfizer Inc. (PFE: Research, Estimates) rose 1-3/4 to 41-15/16 after it posted first-quarter profit of 28 cents a share, beating the expected 25 cents a share and rising from the year-earlier 21 cents a share. Pfizer reached an agreement to buy competitor Warner-Lambert Co. in February in a deal then valued at $90 billion.
Lucent Technologies (LU: Research, Estimates) jumped 3-9/16 to 62-13/16 after reporting first-quarter profit of 23 cents a share for its fiscal second quarter ended March 31, beating the forecast 22 cents a share and rising from the year-earlier 18 cents a share.
America Online (AOL: Research, Estimates) gained 1-1/4 to 62 after it posted fiscal third-quarter earnings of 11 cents a share, beating the year-earlier quarter's 4 cents a share as well as the 9 cents a share anticipated by Wall Street. America Online earlier this year announced plans to merge with Time Warner Inc. (TWX: Research, Estimates) (TWX: Research, Estimates), the parent of CNNfn. Time Warner rose 3-5/8 to 92-9/16
Qualcomm (QCOM: Research, Estimates) soared 2-9/16 to 114-3/4 after reporting second-quarter profit of 26 cents a share, up from the expected and year-earlier 24 cents a share.
Among firms reporting first-quarter earnings after Wednesday's close, Apple Computer (AAPL: Research, Estimates) shed 5-3/4 121-1/8.
(Click here for a comprehensive look at the day's quarterly earnings.) 
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