SAN FRANCISCO (04/04/2000) - Stocks on the Nasdaq exchange plunged for a second day today following a U.S. federal judge's ruling that Microsoft Corp. violated antitrust laws. However, the shares staged a comeback at the end of today's trading to recoup much of the earlier loss.
The technology-heavy Nasdaq lost more than 570 points before rebounding in the afternoon to close at 4,149, down 75 points. The Dow Jones exchange today closed at 11,175, down 47 points. Yesterday, Nasdaq dropped 349 points in expectation of the Microsoft ruling. The judge in the antitrust case released his conclusions of law at 5 p.m. EDT yesterday after the markets had closed.
Microsoft shares dropped today to US$88.7, a loss of $3 per share equivalent to a 3.3 percent decline in value. Yesterday, the software giant's shares closed at $90.87, a $15.3 decline, or a fall of 14.5 percent.
Despite the volatile nature of the market, one analyst today said technology stocks are still strong.
"It seems as if the Microsoft ruling was one of many reasons why investors were selling," Sam Stovall, an investment strategist with Standard & Poors, said in a phone interview today. "Valuations (of stocks) are high in general, and investors were taking profits after the first (calendar) quarter. It became a cascading effect."
Other investors with unrealistic expectations sold off in a panic, Stovall added. "There were people who bought expensive stocks with high growth expectations," he said. "They were day traders and gamblers who bailed out when they saw an erosion of prices."
Standard & Poors still rates the technology sector as strong, designating more than 40 technology company stocks as a "buy," he said.
"There is still value in technology stocks that have earnings, like IBM, Cisco and Sun," Stovall said.
Cisco Systems Inc. stock closed today at $73.1, up 18 cents, or 0.26 percent; IBM Corp. was at $121, up 87 cents, or 0.72 percent; and Sun Microsystems Inc. ended the day at $26.5, down $1.19, or 4.29 percent.