Internet and technology stocks fell sharply for the second straight day, as investors continued to take profits in companies posting better-than-expected numbers.
The ISDEX fell 22 to 788, and the Nasdaq dropped 121 to 4055. The S&P 500 declined 11 to 1482 and the Dow lost 43 to 10,696. Volume declined slightly to 906 million shares on the NYSE and 1.43 billion on the Nasdaq. Declining issues led 16 to 11 on the NYSE and 25 to 14 on the Nasdaq. Traders were wary ahead of Fed Chairman Alan Greenspan’s Senate Banking Committee testimony on Thursday after yesterday’s stronger-than-expected Consumer Price Index report. For earnings reports, visit our earnings calendar and reported earnings.
The cascade of earnings reports continued after the bell on Wednesday. Excite@Home reported a second-quarter loss of 11 cents a share, a penny better than expected. The stock was unchanged after hours after slipping 11/16 to 19 in the regular trading session. Exodus Communications
fell 5/8 to 50 3/4 in regular trading, but rose to 52 after the bell after reporting a second-quarter loss of 10 cents, 2 cents better than expected. Check Point Software
fell 25 11/16 to 224 7/8 in regular trading, but rose to 230 after hours on second-quarter earnings of 50 cents a share, 8 cents better than expected. About.com
fell 3 1/2 to 28 1/4 in regular trading, but rose to 32 in after-hours trading after reporting a second-quarter loss of 33 cents a share, 6 cents better than analysts expected.
E.piphany fell 13 1/2 to 121 1/2 during regular trading, but rose to 125 after hours after reporting a second-quarter loss of 12 cents, 15 cents better than expected. Critical Path
declined 4 11/16 to 63 1/4 in regular trading, and fell further to 58 in light after-hours trading after beating estimates by 2 cents with a 34-cent loss. Extreme Networks
reported fourth-quarter earnings of 9 cents a share, 14 cents better than estimates, and declared a 2-for-1 stock split. The stock fell 13 5/16 to 116 during the regular session, but rose to 123 after hours.
Companies that beat estimates after the bell on Tuesday fared poorly in Wednesday’s trading session.
Commerce One reported a loss of 10 cents a share, 3 cents better than estimates, and revenues rose 1,400% to $62.7 million. But the stock dropped sharply, off 11 1/8 to 55 7/16, on concerns about sequential license growth and market share. ABN Amro and Donaldson, Lufkin & Jenrette reiterated Buy ratings on the stock and made positive comments about growth in new customers and high-margin network revenue. Technical note: the stock’s recent breakout from a three-month symmetrical triangle remains in effect as long as the stock stays above the breakout point of $52. However, it appeared to form an Island reversal (a gap on either side of its recent top) today; not necessarily a huge negative, but a development that bears watching.
DoubleClick fell 2 11/16 to 32 13/16 despite reporting a second-quarter loss of 3 cents a share, 2 cents better than estimates. But DLJ noted that the numbers were driven by better-than-expected interest income. ING Barings and USB Piper Jaffray downgraded the stock on concerns about second-half growth. For more on DoubleClick’s earnings, click here.
RealNetworks lost 9 1/8 to 48 7/8 despite reporting earnings of 6 cents a share, a penny better than expectations. CS First Boston reiterated a Buy on the stock. Broadcom
lost 9 3/4 to 236 despite beating estimates by 4 cents with 23-cent second-quarter earnings. Merrill Lynch rei
terated a Buy on Broadcom. i2 Technologies also suffered despite beating estimates, off 7 1/4 to 131 3/4. Foundry Networks
fell 26 1/4 to 97 7/8 despite better-than-expected earnings. E*Trade
slipped 3/16 to 17 3/4 despite beating estimates, as did Digital Lightwave
, off 1 1/8 to 112 11/16.
CyberSource dropped 4 1/4 to 13 3/4 despite reporting a 40-cent second-quarter loss, in line with estimates. Professional services revenue came in lower than expected, and the firm lowered expectations for the group for the rest of the year.
Travelocity.com , up 15/16 to 20, was one of the few stocks to rise on better-than-expected earnings numbers.
CNET fell 2 9/16 to 29 5/8 on news that the company will buy Ziff-Davis
for $1.6 billion. Each share of ZD common stock will be converted into 0.3397 shares of CNET, and each share of ZDNet
will be converted into 0.5932 shares. ZD rose 2 1/16 to 13 7/16 and ZDZ gained 4 to 16 7/8.
IPO Support.com soared to 32 7/8 on its first day of trading after pricing at 14 and opening at 25 1/2. Intraday high 39 3/16.
NetRadio rose 11/32 to 2 3/4 on news of an alliance with cable ISP RoadRunner.
Stratos Lightwave rose 7 9/16 to 42 1/8 on BusinessWeek Online comments that the stock was undervalued compared to New Focus
, Sonus
and Avanex
.
Some technical comments on the market: The Nasdaq and the ISDEX ended the day at critical support, a good point from which to rally or break down. The Nasdaq is just above the lower boundary (4050) of its rising wedge in the daily and weekly charts, a troubling pattern because the wedge encompasses all of the index’s rally since bottoming at 3042. A break of 4050 could carry the index all the way back to 3042, and potentially lower, and the rising wedge is evidence that the Nasdaq’s recent run may have been a bear market rally. Again, we will wait for the breaks for confirmation. Today’s break below 4073 negated the index’s recent breakout. If the index heads lower, 3982-4000 is likely to provide some support, and below that recent support is in the 3820-3830 range, and key support is at 3725 and 3585. The Nasdaq turned back two days ago at 4289, just under its 62% retracement level of 4337. The ISDEX ended today just below its breakout level of 790, and hopefully will rebound tomorrow. To the downside, 700 has proven strong support; a break of that number could give the ISDEX room to 600. To the upside, the index turned back at 840 two days ago, just under the 50% retracement level (845). The S&P 500 negated its recent breakout this morning, falling back below the 1488-1490 level. The break of its rising wedge yesterday means the index is likely to return to the 1440 level, where the wedge began, but first it must get through support in the 1475-1480 area. 1470 may also provide support, as it is the lower boundary of what could be a larger rising wedge forming since the 1361 level in May. The implication of a break of that line could be a return to the 1361 area, below critical support of 1380. The upper and lower boundaries of the Dow’s bearish diamond pattern are 11,000 and 10,200-10,300, respectively. Its recent breakout occurred in the 10,620-10,700 level, so we don’t want to go below 10,620.
