RealTime IT News

Signs of Weakness Sink Stocks

More signs of economic weakness weighed on stocks on Thursday, as traders waited for Friday's all-important unemployment report.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 14 to 274, and the Nasdaq dropped 74 to 2146. The S&P 500 lost 18 to 1248, and the Dow declined 80 to 10,796. Volume declined to 1.29 billion shares on the NYSE, and 1.99 billion on the Nasdaq. Decliners led 18 to 12 on the NYSE, and 23 to 14 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

After the close, Sapient missed by a penny with a 5-cent loss, Razorfish beat by a penny with a 7-cent loss, and Wind River Systems warned.

During the day, the non-manufacturing NAPM report showed that economic weakness may be spreading beyond the manufacturing sector, as the report showed contraction in the broader economy in April. Traders braced for a weak jobs report tomorrow.

Dell Computer dropped 1.88 to 24.85 on a UBS Warburg downgrade.

PDA stocks were weak on news of increasing competition and a downgrade to Handspring , which lost 3.45 to 14.05. Palm lost 1.69 to 8.06.

EMC lost 3.89 to 40.11 after CS First Boston lowered earnings estimates on the company. Check Point lost 2.94 to 66.70 despite comments from CIBC that the company should hold up better than most in the technology sector.

Genuity lost .29 to 2.43 despite topping estimates by 3 cents with a 30 cent loss. Macromedia plunged 5.98 to 20.60 after missing estimates and providing no forward guidance.

On the plus side, HotJobs rose .70 to 6.10 on better than expected results and a positive preannouncement. i2 , up 2.17 to 22.20, continued to gain on news of a new CEO.

Some technical comments on the market: Note: We include charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The Nasdaq formed a potential island reversal today (the gap up yesterday and gap down today in the first chart), setting up a potential retest of 2000 support. The Nasdaq also broke its uptrend today. It's one more sign that we may be getting a reversal in the market here; the market could have a downward bias into the next Fed meeting on May 15. Let's see how the market reacts to tomorrow's unemployment report, and Cisco's earnings on Tuesday. The Nasdaq could find support in the 2080-2090 range, and a move above 2252 would be bullish. The Dow and S&P also broke their uptrends today (second and third charts), and the S&P gapped below that line, increasing the significance of the break. 10,723 is first support on the Dow, and a close above 10,900 tomorrow would be a big plus, because it would break the Dow's 15-month downtrend in the weekly chart. The S&P 500 needs to clear 1300 to break its main downtrend line and turn bullish, and to the downside, 1235-1240 is first support, and 1180-1207 is critical.

Special report: For a free introduction to technical chart patterns and an overview of last year's action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.