Stocks stumbled in the first day of trading following Easter weekend, as Internet and tech companies on Monday lost the momentum from last week’s impressive surge just as the Q1 earnings season shifts into gear.
It looked like a down day for blue chips as well, as the Dow Jones plummeted in the late afternoon, then rallied in the final 40 minutes of trading to eke out a gain of 31.62, or 0.3%, to 10158.56.
The Nasdaq began Monday with the 2000 mark firmly within its grasp. But the tech-heavy exchange was in the red from the opening bell, sagging briefly below the 1900 mark late in the afternoon before finishing off by 51.86, or 2.6%, to 1909.57. The S&P 500 slipped 3.82, or 0.3%, to 1179.68.
The day’s biggest losses were reserved for ‘Net tickers, as internet.com’s Internet Stock Index, or ISDEX, fell 6.67, or 2.9%, to 220.09. Only 14 of the 50 ISDEX member stocks advanced Monday. On the plus side, the biggest decliner on the ISDEX — online ad services provider DoubleClick — lost just 13.2%.
Overall, nine of 13 Internet sectors tracked by the Internet Stock Report had more stocks underwater than above on Monday. In two sectors — Security and ISPs/Access Providers — losers outnumbered gainers by three to one. For full sector breakdowns, visit WSRN’s Internet sectors page.
Given the Q3 warning by Cisco Systems following Monday’s closing bell, Tuesday also may be a rough one for tech traders, who had been riding a four-day winning streak. The networking equipment giant said Q3 revenue would be down 30% from the second quarter, with earnings per share in the low single-digit range. Consensus estimates called for EPS of 8 cents.
In giving the heads-up to Wall Street, Cisco CEO John Chambers delivered this sobering assessment: “This may be the fastest any industry our size has ever decelerated.”
(For earnings reports, visit our earnings calendar and our reported-earnings page.
For after-hours quotes and news, visit After Hours Trading.)
Among the biggest ‘Net gainers Monday were:
E-learning software provider Saba Software soared 31.8% to $6.09, its fourth consecutive day of gains since hitting an all-time closing low price of $3.75 last Monday. Not sure what’s behind the upward movement, especially Monday’s big jump; SABA beat the street with its Q3 earnings report last month, but still posted a net loss of 28 cents per share.
Singapore-based ISP Pacific Internet Limited rose 26.7% to $3.99. Again, no catalyst.
Web consulting firm Mainspring Communications zoomed up 24.3% to $2.30 on Monday. MSPR has climbed 53.3% since hitting an all-time closing low of $1.50 on April 2.
DoubleClick’s drop to $10.43 came after the company reduced revenue forecasts and predicted a net loss for 2001 of 18 cents to 22 cents per share. Analysts had forecast an annual net profit of 3 cents per share.
Here’s some technical analysis from Paul Shread:
April 16, 4 p.m.: Can the market survive Cisco’s earnings warning?
Oddly, the weakest looking chart at the moment belongs to the S&P 500
(first chart), which broke down today out of a rising wedge at an old
high, the 1184 area. The index looks like it could be headed for a
retest of 1100. The Nasdaq is forming no such bearish pattern, but it
failed to set a higher high (at 1980) by about 20 points, which in
itself is a sign of weakness (second chart). First support is about
1875, but the index will likely slice through that at the open in the
morning. 1800-1850 is one possible support range, then 1750 and 1700.
The Dow continues to form a large bearish rising wedge (third chart),
which could mean a retest of the 9100-9400 level, and potentially a move
as low as 7800-8400. The Dow could easily rally for another 2-3 weeks
before it runs out of room inside that wedge. A break of 9600 would
break that rising wedge.
