Tech Stocks Take a Tumble

Monday, March 12th 2001, 12:00 am
By: News On 6

NEW YORK - The Nasdaq composite index on Monday dropped below 2000 for the first time in 27 months. Blue chips also suffered, taking the Dow Jones industrials down by more than 200 points.

Investors, uneasy about the prospects for a quick economic recovery, punished technology stocks by resuming a selloff begun last week. Tech bellwethers Yahoo!, Intel and Cisco Systems have warned that the weak economy will cut into their business in the coming months.

``Investor sentiment is very fragile right now,'' said Bill Barker, an investment strategy consultant at Dain Rauscher. ``The Nasdaq is in a freefall and every time you try to time the bottom of this market, you get your head handed to you.''

In the first hour of trading on Wall Street, the Nasdaq fell 68.67 to 1,984.11. The technology-focused index is now 60 percent off the all-time high of 5,048.62 reached on March 10, 2000. The last time the index traded below 2,000 was Dec. 16, 1998.

The Dow, meanwhile, fell 209.28 to 10,435.34. The Standard & Poor's 500 index lost 25.07 to 1,208.35.

Cisco plummeted as Wall Street continued to react to the networking company's announcement that it will trim 5,000 positions, chiefly through attrition, because of soft demand for its products. Cisco was off $1.69 at $18.94.

Investors also sold off Intel, down $1.18 at $28.25, and Yahoo!, down 69 cents at $16.31.

The tech selling also pulled the Dow's technology components down, including Microsoft, which fell $2.06 to $54.63, and Intel.

Pharmaceutical and tobacco stocks, both sectors viewed as less risky investment in times of economic weakness, also were weak.

Barker said the market's decline reflects a mix of factors, including disappointment that the Federal Reserve isn't lowering rates more aggressively.

The biggest issue is frustration that there's no apparent end to weak earnings. With the end of the financial quarter approaching and earnings warnings season beginning, Wall Street senses the bad news may just be starting.

``We just don't have anything to look forward to,'' Barker said. ``The interest rate cut we'll get later this month has already been factored into stock prices. The tax bill will probably get hung up in the Senate. And this bad earnings news keeps coming.''

The Russell 2000 index, which measures the performance of smaller companies, fell 6.51 to 467.14.

Overseas, Japan's Nikkei stock average lost 3.6 percent. In afternoon trading, Germany's DAX index was off 1.9 percent, Britain's FT-SE 100 was down 1.7 percent, and France's CAC-40 slipped 2.1 percent.