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AMAT, Dell Fail To Excite Investors

After an 8-month rally, investors are getting harder to please.

During a week that saw better than expected results from tech bellwethers Applied Materials and Dell , the Nasdaq fell 2%.

Looks like the market may finally be ready for a breather.

In some cases, it's clearly come too far too fast. AMAT investors have priced in a much more vigorous recovery than the company is delivering; the stock is trading at 50 times next year's estimates and has yet to turn a profit on a 12-month trailing basis. AMAT's shares drained another 5% today.

Even Dell, which has the unique ability to produce growth in a slow economy by stealing market share, is trading at 40 times earnings while growing at 20-25%. That's fully priced.

Another problem the market faces is a fitful recovery. Wal-Mart , perhaps the one recession-proof retailer, warned yesterday, and retail sales as a whole fell today for the second straight month.

And in a sign of just how much headway the economy faces, capacity utilization finally cleared 75% today - levels below that have historically been associated with depressions. Clearly, the economy is still digging out from the excesses of the roaring '90s.

All that added up to another down day for stocks.

The Nasdaq fell 37 to 1967, the S&P 500 lost 8 to 1050, and the Dow dropped 69 to 9768. Volume declined to 1.34 billion shares on the NYSE, and 1.83 billion on the Nasdaq. Decliners led 18-13 on the NYSE, and 21-10 on the Nasdaq. Downside volume was 66% on the NYSE, and 82% on the Nasdaq. New highs-new lows were 336-9 on the NYSE, and 237-11 on the Nasdaq.

BEA and Portal Software plunged on disappointing earnings reports.

StorageTek rose 4% on an upgrade after an upbeat analyst day.

SCO Group fell 4% after taking on Linus Torvalds.

Cisco lost 2% on reports of insider sales by CEO John Chambers.

Microsoft slipped 0.7% as its European antitrust case unwinds.

CNET fell 6% after acquiring the assets of MP3.com.

Qwest rose 2% as it snapped up network assets.

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