Stocks headed lower on Monday, but on lighter volume than Friday’s sell-off. The ISDEX retested its recent lows.
The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 20 to 304, and the Nasdaq lost 80 to 2327. The S&P 500 dropped 12 to 1286, and the Dow declined 59 to 10,602. Volume dropped to 470 million shares on the NYSE and 790 million on the Nasdaq. Advancers led by 14 to 12 on the NYSE, but decliners led by 20 to 13 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.
Merrill Lynch analyst Henry Blodget cut his estimates for 2001 online advertising from $9 billion to $8 billion, but said he still favors America Online , DoubleClick
and Yahoo
, off 2 1/4 to 26 1/4, which reports earnings Wednesday. For the first time, Yahoo’s whisper number (12 cents) is lower than the official estimate (13 cents).
Corning rose 1 to 51 1/8 on a New York Times report that said the company’s earnings climbed 70% last year on revenues of greater than $7 billion.
Check Point Software plunged 12 7/16 to 108 5/8 on a Robinson Humphrey downgrade. The firm also downgraded Internet Security Systems
, which fell 11 1/16 to 49 5/8.
Ameritrade fell 15/16 to 7 29/32 on an earnings warning. E*Trade
slipped 15/32 to 9 7/32.
Mercury Interactive dropped 4 1/16 to 63 despite bullish comments from Prudential Securities.
1-800-Flowers.com added 1/4 to 5 1/16 after pre-announcing better-than-expected earnings.
VerticalNet dropped 1 5/8 to 3 11/16 after CEO Joe Galli left to head Newell Rubbermaid
after just five months on the job.
Versata plummeted 4 3/16 to 4 3/16 on an earnings warning. Other companies warning include New Era Of Networks
, down 2 11/32 to 3 5/32, and Accelerated Networks
, off 3/8 to 1 11/16.
RealNetworks added 13/32 on an alliance with Texas Instruments
. Datalink.net
, up 3/16 to 2 9/16, won a contract with eBay
.
Investors cheered the acquisition of ServerWorks by Broadcom , which rose 1 3/8 to 88 3/8.
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We’re just about back where the Fed cut interest rates, at 2300 on the Nasdaq, 1280 on the S&P 500, and 10,600 on the Dow. If Mr. Greenspan and Company put a bottom under the market last week, this is the level to hold. Some history to consider, courtesy of Ned Davis Research. The Fed has embarked on an easing cycle 21 times since the Federal Reserve system was founded in 1913. On 17 of those 21 occasions, the first rate cut marked a bottom. The second cut resulted in a bottom on three of the remaining four occasions, and even on the fourth, November 1929, the market rallied until April 1930 before dropping until 1932, when the Fed finally cut rates again. The average one-year gain after the 21 initial cuts was 20% in the Dow; after two cuts, the average one-year gain was 28%. A pretty
compelling historical picture that does not favor the bears here.
The Nasdaq has declined three straight days, but volume has declined each day, and the sellers still haven’t eclipsed last Wednesday’s big record-volume up day. Bear market bottoms have been described as feeling like 100 people trying to get through a doorway at the same time, and last Wednesday sure felt like that to us. Furthermore, the Nasdaq is sitting right on its 1990 logarithmic trendline, a level Mr. Greenspan has defended for the second time. The bears don’t appear to have the volume to send the Nasdaq back below that line.
A look at the intraday charts seems to indicate that the major indexes may be trying to form new uptrends here:
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