Dow, Nasdaq Wipeouts Set Records

SAN FRANCISCO (04/14/2000) - The stock market took a severe loss today, as the Nasdaq and the Dow each suffered their largest point drops ever. The Nasdaq fell 355.72, a whopping 9.67 percent, to 3321.06. The Dow dropped 616.23 points, or 5.64 percent, to 10307.32.

Today's nosedive caps four previous days of losses for the Nasdaq, bringing it to its lowest level in months. The index is down 32 percent from its all-time high, a setback far larger than the 20 percent figure used to define a bear market.

Tech-sector sell-offs caused some of the week's earlier losses, but inflationary fears seemed to spark this morning's fall, as investors reacted to news of a rising consumer price index. The CPI is the indicator the Fed examines most closely when it decides whether to raise interest rates. Though Federal Reserve Chairman Alan Greenspan won't make a decision on rates until early next month, there is talk of a raise of 0.5 percent, a jump that would bring rates to their highest levels in five years. The very possibility was enough to spook investors who were already skittish.

Analysts claim confidence in the future of the tech sector - still the center of today's sell-off - but say it may take time before investors return to their once-beloved techies. "The business is extremely solid," says Andrew Barrett, tech strategist at Salomon Smith Barney. "We've seen great performance from Sun (SUNW) , Gateway (GTW) and AMD, and we're set for another round of terrific earnings next week. But no one seems to care."

For now, anyway. In a study of the Nasdaq since its 1973 inception, Salomon Smith Barney found 30 occasions when the index fell 12 percent or more from a 10-day high. But in 29 of those cases, the Nasdaq went on to rise 34 percent within the following six months. "We can point to these down drafts as being really severe, but historically the Nasdaq tends to rally on that," says Barrett. "It probably won't happen tomorrow, but it probably will come back."

That may be, but it'll have to climb quite a distance. All of the Nasdaq's major constituents fell badly today, regardless of sector. Tech bellwether Intel Corp. (INTC) dropped 8 percent to $110.50, and Oracle Corp. (ORCL) fell 11 percent to $63.51. Even Sun Microsystems Inc., which boasted one of this morning's rare gains, couldn't hold on; by the end of the day, it lost almost 2 percent to close at $76.50. Microsoft Corp. (MSFT) was down 5 percent and IBM Corp. (IBM) was down 6 percent.

The Internet sector suffered a worse fate. Yahoo Inc. (YHOO) fell 14 percent to $116, and CMGI slipped 21 percent to $52.06. JDS Uniphase lost 13 percent to $79.62, and Qualcomm Inc. dropped nearly 17 percent to $105.19. Only eBay Inc.

(EBAY) remained steady, rising 75 cents, to $139.56.

Although the Dow didn't fall as far as its tech counterpart, it suffered losses in stalwarts Wal-Mart, Exxon (XOM) -Mobil, AT&T Corp. (T) and MCI (WCOM) WorldCom Corp., each of which fell between 5 percent and 8 percent. The financial sector was also badly hit, with Charles Schwab losing 20 percent to $39.69, American Express (AXP) dropping 8 percent to $134, and Citigroup shedding nearly 6 percent to $59.

Join the newsletter!

Error: Please check your email address.

More about AMDAmerican Express AustraliaAT&TCharles SchwabCitigroupCMGIeBayGatewayIBM AustraliaIntelJDSJDS UniphaseMCIMicrosoftOracleQualcommSalomon Smith BarneySchwabSun MicrosystemsWal-MartWorldComYahoo

Show Comments
[]