Stocks fall as Nasdaq tumbles 49 points

Tech issues droop

Dow industrials fall 93 to below 11,000 again

Wall Street

November 24, 1999|By BLOOMBERG NEWS

NEW YORK -- Stocks fell yesterday, with the Nasdaq composite index sustaining its worst point loss in more than a month, as investors sold shares to capture profits from the recent rally.

"It's a buyers' strike, and people are locking in gains before the lull of the holiday," said one portfolio manager.

The Dow Jones industrial average lost 93.89 points, or 0.9 percent, to 10,995.63. The Standard & Poor's 500 index fell 16.30 points, or 1.2 percent, to 1,404.64, and the Nasdaq composite dropped 49.69 points, or 1.5 percent, to 3,342.87, after climbing to an 18th straight intraday record early in the session.

Stocks erased early gains after a government report showed that demand for electrical equipment, appliances and semiconductors fell unexpectedly last month. More than two stocks fell for every one that rose on the New York Stock Exchange, where about 926 million shares changed hands.

Some of the stocks that were hit the hardest yesterday were technology shares, which are coming off a terrific run.

Intel Corp., the No. 1 semiconductor maker, dropped $1.50 to $79, and Novellus Systems Inc., a maker of semiconductor manufacturing equipment, fell $2.1875 to $84.25. Oracle Corp., the largest database software maker, lost $3.9375 to $73.50.

AT&T Corp. fell $1.3125 to $50.75. The most widely held U.S. stock had jumped $5.50 Monday after Excite@Home Corp. said it will issue tracking stock for businesses it acquired six months ago. AT&T owns 26 percent of Excite@Home and is the company's largest shareholder.

General Electric Co., the second-largest company by market value, fell $2.4375 to $137.75.

Sigma-Aldrich Corp. rose $3.9375 to $30.9375 and was the biggest gainer in the Nasdaq 100. The No. 1 maker of chemicals used in research said it hired Goldman Sachs & Co. to seek a buyer for its metals business.

Extreme Networks Inc. fell $24 to $70.25. The maker of data-networking gear dropped after Morgan Stanley Dean Witter & Co. analyst Chris DePuy said fiscal second-quarter sales may fall short of some expectations.

Elsewhere on the broad market, the Russell 2,000 index, a benchmark of small-cap stocks, slipped 6.32 points to 454.45; the Wilshire 5,000 index fell 166.35 points to 12,961.55; the American Stock Exchange composite index closed at 822.86, down 5.26 points; the New York Stock Exchange composite index sank 7.50 points to 637.14; and the S&P midcap index was down 8.87 points to 420.04.

The Sun-Bloomberg Maryland index, a price-weighted list of companies with operations in the region, slipped 3.60 points to 199.09. The decline was led by Ciena Corp., which fell $5.0625 to $45.1875, and Medimmune Inc., which dropped $4.0625 to $122.6875.

Oil stocks fell as the price of crude retreated for only the second time in eight sessions on speculation that Saudi Arabia or other producers will make up for a shortfall in supplies from Iraq, which has stopped exporting in a dispute with the United Nations. Yesterday, crude reached its highest price since the 1991 Persian Gulf War.

Exxon Corp. dropped $1.1875 to $78.0625; Texaco Inc. lost $1.9375 to $61.375; and Amerada Hess Corp. fell $2.1875 to $59. The S&P index of integrated international oil companies has gained 9.6 percent since its seven-month low Nov. 5.

Many experts believe computer-related shares will resume their recent surge.

"I don't believe that the rally in tech stocks is over," said Marc Klee, who helps manage a global technology fund at John Hancock Funds. "Interest rates have gone up and you'll start to see a setback in market but it's nothing more than short term. I believe [the rally] will go on over the next few months."

At the same time, some traders say there are warnings that a slump could materialize.

Expectations for moves in the market, as measured by the Chicago Board Options Exchange's Volatility Index, reflect a feeling that stocks are in no danger of suffering a large drop. That could signal a decline, traders said, because when investors are at their most optimistic, they are fully invested and have no money to put into the market.

"Typically, big crises happen when market participants are complacent and carefree," said Nassim Nicholas Taleb, president of Empirica Capital LLC, a derivatives hedge fund in Greenwich, Conn. "This is one of the most complacent markets I have seen since 1995."

Better opportunities are emerging in Asia and Europe.

"Large-cap stocks have had such a good run here in the U.S., and any reasonable person might think that it's a good time to allocate money overseas as they see the economy improving in Asia and Europe," said Bill Andersen, a money manager at Driehaus Capital Management Inc. in Chicago.

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