Technology and Internet stocks sold off sharply on Tuesday after the Federal Reserve failed to come through with a hoped-for cut in interest rates, even though it strongly hinted that a rate cut could come as soon as next month.
The ISDEX plummeted 33 to 376, and the Nasdaq plunged 113 to 2511, both new 52-week lows. The Nasdaq is now more than 50% off its all-time high of 5132, and the ISDEX is off more than 60%. The S&P 500 fell 17 to 1305 and the Dow dropped 61 to 10,584. Volume surged to 1.31 billion shares on the NYSE and 2.31 billion on the Nasdaq. Advancers led by a handful of stocks on the NYSE, but decliners led 26 to 13 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.
The Nasdaq futures closed about 100 points below fair value after Foundry Networks issued an earnings warning after the bell and Jabil
missed earnings estimates. Stocks that sold off during the day kept falling after hours. Foundry plunged 16 3/8 to 16 5/8, Juniper Networks
lost 20 13/16 to 108 1/16, Cisco
lost 3 1/8 to 39 13/16, and Extreme Networks plummeted 20 25/16 to 34.
During the day, eBay lost 6 1/4 to 32 1/16 after Dain Rauscher Wessels cut its price target from $115 to $50. Yahoo
fell 4 1/4 to 27 3/4, a new 52-week low. Amazon.com
, off 2 1/4 to 17 5/8, also hit a new yearly low.
Handspring recovered 1 1/8 to 45 7/8 after announcing the launch of its mobile VisorPhone. The stock had dropped in recent days as its lock-up period expired.
Old leaders that rose in advance of the Fed decision reversed by the close. Ariba dropped 3 11/16 to 58 9/16, i2
fell 5 13/16 to 43 7/8, and Openwave
slipped 1 13/16 to 49 1/16. All three issues finished 10 points off their intraday highs.
Ciena plunged 23 7/8 to 72 1/2 after announcing the acquisition of privately-held Cyras for approximately $2.6 billion. The deal will dilute 2001 earnings of 70 cents by 19-22 cents.
ValueClick was unchanged at 4 11/16 after announcing it will acquire Z Media for about $11.7 million.
Loislaw.com soared 2 23/32 to 4 7/32 on news that it will be acquired by Wolters Kluwer for $4.3545 per share.
MP3.com slipped 25/32 to 3 1/4 after EMusic
and its independent record label partners launched a copyright infringement suit against MP3.
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The market clearly was looking for a rate cut, and the Fed didn’t deliver. With the futures 100 points below fair value, hopefully the Nasdaq can wash out weak positions, drive a high level of fear into this market, and put in a bottom. Any hope of a bottom has been pretty much negated here if the futures don’t close about 100 points above fair value in the morning. We had a big positive divergence today, with the number of new lows (481) much lower than the 800 new lows achieved the last time the Nasdaq was at this level, but at this point we suspect the next stop will be the 1990 logarithmic trendline at about 2350-2400. The new lows in the Nasdaq indexes and the ISDEX are big negatives. One positive is that the S&P 100 closed right at a strong support (68
5), its fourth touch in that area. If it doesn’t hold, 650 support is next. Gaps at 689 on the S&P 100 and 1312 on the S&P 500 were filled today, potential positives.
The Dow has been the best-looking index as of late, no doubt due to a flight to safety, but is back below the important 10,600 level. The index could be forming an inverse head-and-shoulders, the latest pattern to predict a possible move above 11,000.
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