Market Tumbles on Earnings Warning

Thursday, November 30th 2000, 12:00 am

By: News On 6

NEW YORK (AP) â€” Wall Street's frustration with technology stocks intensified Thursday on an earnings warning from PC maker Gateway that sent the overall market tumbling. The drop sent the Nasdaq composite index below 2,524, more than 50 percent less than the closing record it set in March.

The Dow Jones industrials skidded more than 300 points.

``The financial markets today are sending a strong signal that worries about the economy and earnings are intensifying ... that we may be headed toward a recession or hard landing,'' said Hugh Johnson, a chief investment officer at First Albany Corp. ``The good news is that stocks are getting down to levels that are arguably fairly valued.''

The drop continued a slide in technology companies that began after Labor Day, when it first appeared that the volatile sector would perform poorly in a slowing economy. Thursday's selling, which spilled over to the rest of the market, appeared directly related to Gateway's announcement late Wednesday that its holiday sales were weaker than expected.

The market's fears were compounded by a Commerce Department report showing Americans' personal income slipped 0.2 percent in October, the first decline in nearly two years. The report also found consumer spending rose by the smallest amount in six months.

In afternoon trading, the Nasdaq was down 166.64 at 2,540.29, a 6 percent loss, after briefly dipping down to 2,523.04 â€” just below 50 percent of its March 10 close of 5,048.62. The Nasdaq is trading at its lowest levels since early August 1999.

The Dow was down 3 percent or 323.07 to 10,306.04. The broader Standard & Poor's 500 index was off 44.34 at 1,297.59.

Gateway fell $2.60 to $17.70, giving it a loss of 43 percent over two days. The stock, which a year ago was trading at more than $80 per share, was also downgraded by several analysts.

The selloff quickly spread to other technology issues on concerns that Gateway's warning reflected industrywide problems. Rival computer maker Dell fell $2.75 to $19.06.

Chip makers, which supply the PC industry, also dropped, led by Intel, down $5.44 at $37.13. Microsoft was down $7.38 at $57.69.

Intel and Microsoft are Dow components, and their declines helped pull the blue chip index lower.

The selling unsettled sectors such as financial and drug issues that have lately been seen as a safe haven. Banker J.P. Morgan fell $5.06 to $135.25 and American Express slipped $2.94 to $54. Merck was off 88 cents at $94.

Declining issues outnumbered advancers nearly 3-to-1 on the New York Stock Exchange, where volume came to 915.46 million shares, well ahead of the 721.06 million reported Wednesday.

The Russell 2000 index fell 13.37 to 441.23.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com