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Better than bad?
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October 29, 2001: 6:31 p.m. ET
Last week's rally comes to a bad end, as the Dow drops 276 and the Nasdaq loses 69, thanks to anthrax scares and gloomy economic data.
By Bethany McLean
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NEW YORK (CNNmoney) - EVERYTHING HAPPENS FOR A REASON Or so they say. But it sure doesn't feel that way anymore, does it? Last week, stocks rallied, although no one offered a very good answer to the question "Why?" (Isn't that a Duran Duran song?) Today, our rally ended -- in a big way. The Dow fell 275.67 to 9,269.50, and the Nasdaq lost 69.44 to 1,699.52. Why? Actually, there are lots of good reasons -- unfortunately. More anthrax at the State Department and the Supreme Court. Lots of gloomy economic data expected this week (although gloom is nothing new, and the statistics always get revised). Add to that fears that Argentina will (finally) default on its debt -- plus the simple fact that Boeing is a Dow member (see below). But since these are tough times, let's get beyond the rational pessimism, look on the bright side, and call today a "healthy pullback." Sound good?
STOCK STUFF Techs were down, down, down. Intel, down 6.5 percent. Cisco, down 5 percent. Sun, down 5 percent. Contract manufacturer Solectron (SLR: Research, Estimates) lost $1.60 to $13 after announcing that revenues would be well below forecasts -- so much for BetterNExpected. Depressed? Enough on tech. Boeing (B: Research, Estimates) fell $3.93 to $33.75 after not getting the Joint Strike Fighter contract -- while Lockheed Martin (LMT: Research, Estimates), which won the contract, also fell 92 cents to $49! Doesn't seem fair, does it? Wasn't someone supposed to benefit?
En-wrong (ENE: Research, Estimates) fell another $1.59 to $13.81 despite announcing in this morning's WSJ its plans to get more cash. (Moody's cut its rating on Enron's debt to two notches above junk, and left the debt on review for further downgrades.) Echostar (DISH: Research, Estimates) dropped $1.18 to $24.08 on the news that it had snatched DirecTV out from under Rupert Murdoch's News Corp (NWS: Research, Estimates). Lots of repercussions here: GM (GM: Research, Estimates) shed $2.64 to $42.76, Gemstar-TV Guide (GMST: Research, Estimates) plunged $3.05 to $20.14, and News Corp fell $1.80 to $27.25. Sprint PCS (PCS: Research, Estimates) lost $1.88 to $22.11 on a Goldman Sachs downgrade. McDonald's (MCD: Research, Estimates) fell $1.67 to $27.28 after S&P downgraded the company's debt. Moo. But FedEx (FDX: Research, Estimates) popped $1.38 to $40.86 on word that it will beat estimates. Maybe those new commercials are working. And Titan (TTN: Research, Estimates), which makes systems that can sanitize mail, jumped 65 cents to $26.35. Are Titan-like stocks the new new tech stocks? And is that a good thing?
BORING IS BETTER Oh, how embarrassing. You know those snazzy, sexy tech stocks? Well, Merrill's Rich Bernstein says that utilities -- yes, utilities -- have outperformed the Nasdaq since its inception in 1971. The S&P Utes have posted a 12 percent compound annual return, while the Nasdaq has posted an 11.2 percent compound annual return. Is this akin to discovering that Britney Spears has outsold Led Zeppelin? (Could that actually be true?) Or like finding out that Birkenstocks have more sex appeal than Blahniks, and that you've been risking your life and your ankles all these years for no reason at all? (Not that I would ever do such a thing.) Bernstein thinks the issue is that the things we all want are rarely those that are best for us -- by definition. (And is there a life lesson there?) "If investors agree that a certain sector is risky and a great investment for long-term capital appreciation, then it probably will not provide superior returns....The sectors that are ignored often provide superior returns because the risk premium is unusually high." Go, Utes. I think I'll try sneakers.
LOOSE CHANGE
"Better than Bad," says UBS Warburg permabull Ed Kerschner about third-quarter earnings. Isn't that reassuring?
Can eBay (EBAY: Research, Estimates) keep it up? The company, which held an analyst meeting today, promises yes (sales up almost 4 times in the next four years!) but investors aren't so sure. The stock fell $4.48 to $52.52.
Reuters reports that venture capital investing fell 31 percent from the second quarter to the third quarter, to $7.7 billion -- but VCs are still on track for their third most active year ever. Uh-oh.
"Heard this one yet?" asks my Minnesota friend Jon. "They picked up another terrorist -- this time in Two Harbors. His name? Ole been loggin' again."
"This is Rich from CNN in Atlanta. Just got my XM Satellite Radio installed and absolutely love the system. Incredible. Circuit City did not have the Sony portable version for car and home so they installed another radio and ordered the Sony. I'm driving to Jacksonville, FL for the Georgia/Florida football game this weekend and will see how it handles the road trip. I can't wait!...I thought it was great customer service for Circuit City to help me get the service for this weekend and order the new radio." XM (XMSR: Research, Estimates) gained 6 cents to $6.80 today after announcing earnings, or rather the lack thereof -- the company's quarterly loss widened to $65 million, but it says that the launch is on schedule.
Our very own Behind the Music! From reader Burton Bruggeman...."I was in Hibbing - in the spring of either '63 or '64 at the Iron Range Conference track meet, I think. Carol and I were walking down Howard Street and this guy walked out of Zimmerman's Electric Store. Little guy, greasy hair, bad beard, Levi's and Levi jacket. Carol knew Bobby Z, and immediately entered into a conversation with him....She introduced me and we all talked. I kept thinking that this guy was obviously not a jock, obviously not cool, and obviously not anyone that I wanted to hang around with. We then parted company.... Carol then raved about how cool he was, and how he was going really be something someday. Needless to say, I thought she was way off in her handicapping of people. I figured something like 'no letter jacket, no future'...A couple of years later, I am in a dorm, and one of my friends is playing this album. I had mixed feelings about it, but he handed me the cover, 'Highway 61 Revisited.' My first reaction was that this was the highway from the Cities to Duluth. I turned it over there was Bobby, same guy, still looking scruffy." 
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