Market Optimism Goes AWOL

The optimism that investors displayed for most of this month was nowhere in evidence Monday as stocks staged a major pullback from their recent heady gains.

Internet and tech stocks led the backslide, with’s Internet Stock Index, or ISDEX, plummeting 21.48, or 8.2%, to 240.76. The Nasdaq tumbled 104.09, or 4.8%, to 2059.32, while the Dow Jones slipped 47.62, or 0.5%, to 10532.23. The S&P 500 fell 18.62, or 1.5%, to 1224.36.

While the major exchanges and indexes also declined on Friday, Monday’s losses were much more severe. It will be interesting to see what kind of impact Tuesday’s Consumer Confidence Index will have on Wall Street. A second consecutive month of increasing confidence could rally the bulls, especially if Q1 earnings already have been built into stock prices.

Only six of the 50 ISDEX members stocks posted gains, with the leader being Ticketmaster , up a modest 4.2%. Seventeen ISDEX stocks lost at least 10%, led by Broadcom , which nosedived 23.4% to $4.67 after Merrill Lynch reiterated a near-term “neutral” rating on the high-speed chipmaker.

Eleven of the 13 Internet sectors tracked by Internet Stock Report and WSRN had more losers than gainers. Overall, roughly two-thirds of all ‘Net tickers were down. For full sector breakdowns, visit WSRN’s Internet sectors page.

Database software maker Oracle also took a hit in response to an analyst’s actions. ORCL lost 13.2% to $17.15 after Lehman Brothers downgraded shares to a “buy” from a “strong buy.”

The biggest upside mover among Internet stocks was Web-based grocer Webvan Group , which soared 167% to 16 cents per share from 6 cents. This comes a week after the company was notified it faced a delisting from the Nasdaq and three days before it is expected to release Q1 results showing a net loss of
19 cents per share.

(For earnings reports, visit our earnings calendar and our reported-earnings page.
For after-hours quotes and news, visit After Hours Trading.)

Now for some technical analysis from Paul Shread:

April 23, 4 p.m.: Believe it or not, we have yet to hit any meaningful
support on the indexes; the recent run-up was that sharp. The Nasdaq
would test its uptrend line and the top of a breakout gap just above
2000 (first chart). If this is any sort of a bottom, we would like to
see the Nasdaq hold the 1950 level, the descending neckline in that
first chart; otherwise a retest of the lows may be in store. A move
above the 2250-2300 area would be bullish, but a failure below that
level would be bearish, so we want this pullback to be a mild one,
hopefully turning up by Wednesday. The S&P 500 also has an uptrend line
and a breakout gap, both of which should provide support in the
1200-1210 area (second chart). The S&P needs to hold above 1180, and a
move above 1300 would be bullish. The Dow needs to hold the 10,500 level
tomorrow (third chart), or its pullback could be stronger than expected.
To the upside, the Dow needs to take out the important 10,859 level,
where its steep sell-off began.

News Around the Web