Microsoft's Big Buyback No Help for Stocks
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It took a $40 billion share buyback plan to give Microsoft (NASDAQ: MSFT) shares all of a 1% gain on Monday.
But the rest of the market got crushed on uncertainty over the federal government's $700 billion financial bailout plan, as Congress and the White House wrangled over the plan's details.
Also unnerving investors was the conversion of Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) to traditional banks, effectively ending the Wall Street business model, which this year has seen the rescue of Bear Stearns, the bankruptcy of Lehman Brothers and the takeover of Merrill Lynch.
Because of all the uncertainty, the dollar and treasury prices fell, and oil had its biggest ever single-day price jump.
In addition to the five-year buyback plan, Microsoft also said it will issue commercial paper for the first time in its history. HP (NYSE: HPQ) lost 2% despite announcing an $8 billion share buyback plan.
Tech names posting steep losses on the day include NetApp (NASDAQ: NTAP), Sun (NASDAQ: JAVA), Apple (NASDAQ: AAPL), AMD (NYSE: AMD), Amazon (NASDAQ: AMZN) and Broadcom (NASDAQ: BRCM), each of which lost 7% or more.
Secure Computing (NASDAQ: SCUR) soared 23% on a takeover offer from McAfee (NYSE: MFE).
The Nasdaq plunged 95 to 2179, the S&P fell 48 to 1207, and the Dow tumbled 372 to 11,015. Volume declined to 5.39 billion shares on the NYSE, and 1.93 billion on the Nasdaq. Decliners led by a 28-6 margin on the NYSE, and 22-7 on the Nasdaq. Downside volume was 83% on the NYSE, and 85% on the Nasdaq. New highs-new lows were 23-87 on the NYSE, and 37-95 on the Nasdaq.