Nasdaq hits lowest close since Dec. 1998

Goldman Sachs report sparks tech sell-off

Dow down slightly

February 28, 2001|By BLOOMBERG NEWS

NEW YORK - The Nasdaq composite index tumbled to its lowest close since December 1998 yesterday after reports signaled that the economy is slowing and Goldman Sachs & Co. cut profit forecasts for more than 30 technology companies.

Qualcomm Inc., JDS Uniphase Corp. and Cisco Systems Inc. led the Nasdaq decline. EMC Corp., Hewlett-Packard Co. and Applied Micro Circuits Corp., among the stocks whose earnings estimates were cut by Goldman, also fell.

The Nasdaq dropped 100.68 to 2,207.82, its lowest close since Dec. 31, 1998, and its first loss in three sessions. The Standard & Poor's 500 index fell 9.71, or 0.8 percent, to 1,257.94.

The Dow Jones industrial average declined 5.65, or 0.1 percent, to 10,636.88. Philip Morris Cos. rose, limiting the Dow's loss.

The Sun-Bloomberg index of Maryland stocks fell 5.54 to 219.83, led by Ciena Corp., down $7.50 to $69.75, and Manugistics Group Inc., off $5.31 to $30.69.

The Russell 2000 index of smaller stocks fell 9.56, or 2 percent, to 478.75. The Wilshire 5000 total market index declined 130.29, or 1.1 percent, to 11,592.11. The value of U.S. stocks dropped $149.8 billion.

Eight stocks fell for every seven that rose on the New York Stock Exchange. Almost 1.1 billion shares traded on the Big Board, 10 percent below the three-month daily average.

`Dreadful' earnings

Stocks were hurt after a Conference Board report showed consumer confidence in the U.S. economy reached its lowest level since June 1996, reflecting a drop in expectations for business and employment conditions over the next six months.

Separately, a government report showed orders for durable goods slumped in January to their lowest level in a year and a half.

"The bullish force in the stock market is that the Fed is in a rate-cutting mode, and the bearish force is the dreadful corporate earnings," said Richard Hoey, chief investment strategist and chief economist at Dreyfus Corp. "We're continuing to get new information on how painful the decline in corporate earnings is and that's driving the market right now."

Technology shares dropped after Rick Sherlund and other Goldman analysts said investors shouldn't buy the stocks now, even after declines that have left the Nasdaq 56 percent below its March 10 record high.

Goldman analysts cut revenue and profit forecasts for more than 30 companies, including International Business Machines Corp., EMC., Oracle Corp., Hewlett-Packard, Ariba Inc. and Applied Micro.

IBM slipped $2.71 to $102.59; EMC dropped $3.34 to $41.66; Oracle lost $1.50 to $21.69; Applied Micro shed $4.75 to $30.31; Hewlett-Packard declined $1.40 to $28.60, and Ariba fell $2.44 to $17.25.

Qualcomm, a developer of mobile-phone technology, declined $7.44, or 12 percent, to $55.63. Cisco, the largest maker of computer-networking equipment, dropped $2.06 to $24.

Nike Inc. tumbled $9.57, or 19 percent, to $39.60. The world's biggest athletic-shoemaker said fiscal third-quarter profit will be as much as 38 percent less than analysts forecast after it had trouble filling orders and had sluggish sales in the U.S.

Tobacco stocks rise

I2 Technologies Inc., a maker of software for managing manufacturing and distribution and a supplier to Nike, fell $7.94 to $27.56. Nike blamed problems with an I2 system for shortages of some products and overstocking of others.

Gateway Inc. dropped $1.09 to $16.72 after an analyst at Merrill Lynch & Co. Inc., said the personal-computer maker is likely to lower its forecast for earnings per share this year to "well below the $1.28 Street consensus."

Tobacco stocks rose as investors moved money from slumping technology shares to industries seen as faring well.

Philip Morris rose $1.76 to $48.26; RJ Reynolds Tobacco Holdings Inc. advanced $1.28 to $55.45; Loews Corp. gained $3.98 to $106.40; and Universal Corp. rose $1.09 to $38.25.

AT&T Corp. rose $1.07 to $22.91. The biggest U.S. long- distance telephone and cable-television company agreed to sell some U.S. cable systems and a stake in Japan Telecom Co. for $3.6 billion to pay down debt.

Mediacom Communications Corp. rose $1.25 to $19. The rural cable-television provider will buy U.S. cable systems serving 840,000 subscribers in Georgia, Illinois, Iowa and Missouri from AT&T for $2.22 billion in cash.

Frontier Airlines Inc. plunged $11.19 to $24.31. The discount airline said it expects fiscal fourth-quarter profit to miss estimates by as much as 36 percent.

Bristol Myers-Squibb Co. dropped $1.54 to $62.06. Federal prosecutors subpoenaed the No. 1 manufacturer of cancer medicines, seeking information about whether it provided oncologists with inducements, such as free drugs and devices, in exchange for purchases of other Bristol drugs, and whether it encouraged doctors to bill Medicare improperly, the Wall Street Journal reported.

Harris Corp. fell $1.25 to $24.80. The communications-equipment maker said it expects profits to fall as much as 19 percent short of analysts' estimates for the fiscal year ending in June.

Overseas, Japan's Nikkei stock average fell 1.1 percent. Britain's FTSE 100 gained 0.1 percent; France's CAC-40 rose 0.4 percent; and Germany's DAX index rose 0.5 percent.

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