Investors fled shares of Internet and technology companies on Thursday for the relative safety of blue chips, as earnings worries continued to plague New Economy stocks.
Amazon.com and VerticalNet dropped sharply despite beating earnings estimates, and earnings warnings from Nokia and WorldCom rocked shares of telecom companies.
The ISDEX fell 39 to 732. The Nasdaq lost 145 to 3842, in the process closing below its 200-day moving average. The S&P 500 slipped 2 to 1449 after rising as much as 12 points in the first hour of trading. The Dow bucked the trend, rising 69 to 10,586. Volume declined slightly to 1.15 billion shares on the NYSE, but rose to 1.77 billion on the Nasdaq. Decliners led by 14 to 13 on the NYSE and a whopping 28 to 11 on the Nasdaq. Only three ISDEX stocks traded higher. The second-quarter Employment Cost Index came in in line with estimates at a 1% gain, but Durable Orders for June came in at the highest level in 9 years. Second-quarter GDP will be released tomorrow. For earnings reports, visit our earnings calendar and reported earnings.
Amazon.com fell 4 11/16 to 31 3/8, the lowest level since December 1998, after reporting a second-quarter loss of 33 cents a share, 2 cents better than estimates. But revenues came in at $578 million, below estimates of $585 million. Analysts lined up to downgrade the stock, including the analyst most associated with the stock, Merrill Lynch’s Henry Blodget. He downgraded the stock from near-term Buy to near-term accumulate. For more on Amazon’s earnings, click here.
InfoSpace announced that it is buying profitable Go2Net
for 1.82 shares for each share of GNET. InfoSpace also announced a second-quarter loss of 1 cent per share, a nickel better than estimates. Investors voiced their disapproval, sending shares of Go2Net lower by 1/8 to 60 7/16, and punishing InfoSpace, down 13 17/64 to 34 15/32.
VeriSign reported earnings of 7 cents a share, 9 cents better than estimates. But the stock fell 3 15/16 to 175 1/4.
VerticalNet reported earnings of 23 cents a share, 7 cents ahead of estimates. But the stock fell 8 3/4 to 48. Lehman Brothers reiterated Buy, but lowered its price target from $175 to $105 and raised its fiscal 2000 loss estimate by 8 cents to minus 84 cents.
JDS Uniphase reported earnings of 14 cents a share, 2 cents better than expected. The stock, which was added to the S&P 500 last night, dropped 6 59/64 to 129, back below its recent breakout point of 130-131. Sands Brothers lowered the stock from Buy to Neutral based on the earnings report and the stock’s recent run-up.
WebMethods beat estimates by 3 cents with a 16-cent loss. But the stock fell 17 11/32 to 115 25/32. NBC Internet
reported a loss of 81 cents, 4 cents better than forecasts. The stock lost 1 33/64 to 10.
Looksmart reported a second-quarter loss of 9 cents a share, 5 cents better than estimates, but the stock lost 59/64 to 20 1/8. Covad
beat estimates by 13 cents with an 86-cent loss, and the stock lost 5/16 to 17 3/8 after trading as high as 19 15/16.
Software.com fell 13 11/32 to 106 9/32 despite beating estimates by 8 cents with 8-cent earnings. MicroStrategy
missed by a penny with a loss of 54 cents. The stock dropped 6 3/8 to 23 5/8.
EarthLink beat estimates by 7 cents with a 29-cent loss, yet declined 1 11/64 to 13 1/2. Women.com
reported in line with estimates at a 20-cent loss, and declined 1/2 to 3 13/16.
Register.co
m beat estimates by 2 cents with a 3-cent loss, but lost 3 1/8 to 27 5/8. Ramp Networks
missed by 8 cents with a 33-cent loss, and the stock dropped 2 25/32 to 6 1/32.
pcOrder.com reported a 13-cent loss, in line with estimates, and fell 3 5/16 to 4 11/16, a new low. The company missed customer acquisition goals, and Goldman Sachs downgraded the stock.
TheStreet.com beat estimates by 3 cents with a 52-cent loss, but the stock slipped 3/32 to 5 29/32.
kforce.com fell 5/8 to 4 3/8 after dropping 20% yesterday on an earnings warning. Goldman Sachs downgraded the company to Outperform from Recommended List.
Axent Technologies gained 4 15/16 to 24 on news that it is being acquired by Symantec
, off 13 11/16 to 50. Axent also beat estimates by 3 cents with 6-cent earnings.
Corning fell 9 5/16 to 248 13/16 after trading as high as 275 on news that it won’t be buying Nortel’s
optical components business. The talks, which were reported on Monday, have ended.
The IPO of Mainspring priced at 12, opened at 17 5/16, but closed at 13 15/16.
EMusic.com gained 13/32 to 2 19/32 on news that a judge has ordered Napster to shut down its music-sharing site. Liquid Audio
initially traded higher on the news, but fell 1 1/8 to 9 7/8. After the bell, EMusic slipped to 2 1/2 after beating estimates by 3 cents with a 34-cent loss.
Also after the bell on Thursday, eToys beat estimates by 2 cents with a 37-cent loss. The stock lost 5/16 to 5 1/16 in regular trading, and slipped to 4 15/16 after hours.
Beyond.com beat estimates after the bell by 6 cents with a 29-cent loss. The stock rose to 1 1/2 after hours after closing unchanged at 1 13/32. Buy.com
beat estimates by a nickel with an 18-cent loss. The stock rose to 4 1/2 after hours after closing at 4 3/8, off 11/32. iVillage
missed by 6 cents with a 94-cent loss. The stock slipped to 6 1/2 after ending the day at 6 17/32, down 7/8.
Some technical comments on the market: The Nasdaq closed below its 200-day moving average at around 3870, and closed just above important recent support at 3820-3830. If the bulls can’t manage a rally here, next up are the critical support levels of 3700 and 3583; below 3500 is a lot of air. The index has declined steadily since breaking its bearish wedge just under 4100 on Monday. That wedge began at 3042 in May, thus giving the index potential downside back to that level. The Nasdaq’s recent rally turned back right at the intersection of the bearish wedge’s upper boundary and the index’s highest downtrend line, touching on the April highs of 5132 and 5070 and the recent 4289 high. Watch that line for the first sign the tech bear may be over, or that a rally may be failing; the downtrend line is now at around 4200. The ISDEX is also forming a rising wedge, with the lower boundary at about 725; a break of that line could carry the ISDEX all the way back to 560, its May low. The ISDEX turned around at 726 today. Below 725, 700 has proven strong support; a closing break of the index’s recent intraday low of 692 would be a warning sign. To the upside is 790 resistance. Above that, the ISDEX turned back recently at 840, just below its 50% retracement level of 845. The top of the ISDEX’s rising wedge is now around 850. The S&P 500 also broke a bearish rising wedge on Monday, then on Tuesday rallied back to the lower boundary of the wedge before heading lower. That action would seem to confirm the bearish pattern, with potential downside to 1361, where the wedge began in May. The lower boundary of the broken wedge is now around 1482. Next support is around 1440 (the index traded as low as 1445 today), and crit
ical support is 1390, the index’s October 1998 uptrend line. A break of that trendline could carry the index to 1170 or lower, so we do not want to violate that line. The Dow turned back today right at the lower boundary of the bearish diamond pattern (10,500, but we’ll continue to use 10,200-10,300 because of strong support in that range and the requirement of a 3% break of a major pattern). A break of that line could carry the Dow as low as 8,500. The upper boundary of the Dow’s bearish diamond pattern is 11,000. The index’s recent rally ran out of steam at 10,875.
