RealTime IT News

Consumer Confidence Weighs On Stocks

Stocks sagged Tuesday on yet another stronger than expected drop in consumer confidence, as recession fears grew.

The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 14 to 296, and the Nasdaq dropped 64 to 2244. The S&P 500 lost 8 to 1259, and the Dow declined 23 to 10,619. Volume rose to 470 million shares on the NYSE, but declined to 750 million on the Nasdaq. Decliners led 15 to 13 on the NYSE, and 19 to 12 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.

Consumer confidence dropped to 106.8, well under expectations for a 111 reading. Future expectations plunged to 68.7, the lowest reading in 7 1/2 years. However, two top Fed officials have cooled hopes for an intermeeting rate cut in the last 24 hours, so traders will likely have to wait until March 20 for the next rate cut. Even so, the Fed funds futures market is still pricing in a 25 basis point intermeeting rate cut, so the pros are betting real money on an intermeeting rate cut. Fed Chairman Alan Greenspan will testify before Congress tomorrow. The Fed confirmed yesterday that he is revising his excessively rosy Senate testimony of two weeks ago, a rare step that could mean that Greenspan will hint of further rate cuts tomorrow.

i2 Technologies fell 5 5/8 to 29 7/8 after Nike blamed i2's software for Nike's huge earnings software. Ariba lost 1 to 18 3/4, and Commerce One dropped 2 3/16 to 20.

JDS Uniphase lost 3 5/16 to 29 5/16 after announcing that it will lay off 3,000 employees. In a negative sign for the Nasdaq, Cisco broke $25 support, falling 1 9/16 to 24 1/2.

Broadcom fell 5 1/8 to 57 7/8 on accounting concerns raised by the Wall Street Journal.

Yahoo lost 1 3/4 to 24 after speakers at a new media conference said the company was not an attractive takeover target at its current valuation.

eToys announced that it will file for bankruptcy protection, and said its stock has no value.

GoAmerica slipped 3/8 to 4 1/2 despite topping loss estimates.

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 down out of a 50-point trading range, and could be headed for a bout with 2200 (first chart). Given the lighter volume on the decline, the index is likely to hold its recent lows around 2150-2200 (2050 is the next strong support below that), but the index sure looks weak to us. There are absolutely no buyers north of 2300, making it all but impossible for the index to add to its modest gains of the last few days. The only thing holding up the market here is the threat of further Fed rate cuts; those hopes are being dashed, but the threat is always present. To the upside, the 2300 level is tough resistance, and needs to be broken with force. It is also where the middle of three downtrend lines from September can be found, adding to the resistance at that level (second chart). As we mentioned yesterday, the weakness in semiconductor stocks was worrisome for tech stocks; the semis are getting hit even harder today.