RealTime IT News

S&P Moves Further Into Bear Territory

The S&P 500 was close to an official bear market on Friday for the first time since October 1990, as the brutal sell-off in technology and Internet stocks continued to spread to the broader market.

The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 12 to 284, another new low, and the Nasdaq dropped 74 to 2170, its lowest level since December 1998. The S&P 500 fell 31 to 1221; a close at that level would mark a 20% decline from the index's closing high of 1527. From its intraday high of 1553, the S&P was down 21.4%. The Dow dropped 187 to 10,339. Volume declined to 485 million shares on the NYSE, and 900 million on the Nasdaq. Decliners led 20 to 8 on the NYSE, and 26 to 9 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.

Sun Microsystems slipped 13/16 to 20 after warning that revenues will come in at 7-9 cents a share, much less than the 15 cents analysts expect. But the company also announced a $1.5 billion stock buyback program. Sun's warning seem to do more damage to the rest of the market than it did to its own stock.

Wireless stocks were hit hard. Qualcomm plunged 15 7/8 to 15 1/4 after the company said third-generation mobile technology could be delayed until 2004 or 2005. Motorola warned, and Nokia was downgraded by Goldman Sachs. Surprisingly, wireless data firms like Openwave and Aether , already hard-hit, escaped relatively unscathed.

InfoSpace rose 7/16 to 3 7/8 on news that CEO Naveen Jain was buying share of the company.

Network Appliance fell 1 13/32 to 32 1/2 despite a $1 billion deal with Intel .

Priceline.com rose 5/16 to 2 23/32 on a Legg Mason Strong Buy rating and $6 price target, on the belief that the worst is behind the company and it should achieve profitability by June.

Stamps.com slipped 1/8 to 3 1/16 on a better than expected loss. Value Click lost 7/32 to 4 5/8 after beating estimates with 4-cent earnings but warning. Rhythms , unchanged at 1 1/32, topped loss estimates.

Cisco slipped 9/16 to 25 11/16, but continued to hold 25 support.

Some technical comments on the market: Note: We are now including 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 is breaking support from its early 1999 lows around 2185; the next strong support is 2028, the July 1998 top (see first chart for both support levels). The Nasdaq is extremely oversold and well overdue for a bounce, so we expect one to start by Tuesday at the latest, if not today. However, we're not sure how strong that rally will be; the Nasdaq has really rolled over since it broke its 1990 logarithmic trendline at 2388 on Tuesday (second chart). To the upside, the Nasdaq faces resistance at 2250-2350, and then the all-important 2388 level; we suspect the index may not be able to clear that level, barring some aggressive Fed rate cutting. As we said yesterday, the good news is that the previous four times the Nasdaq hit a new two-year low, it was 1% higher three weeks later and 30% higher a year later. Here's hoping the techs hold true to form. Note: see long-term trendlines at the