Brazil's economic uncertainties continued to weigh heavily on Wall Street Thursday. Fear that the brush fire could spread to other Latin American nations caused share prices to tumble further, although tech and Internet shares struggled mightily to resist the sell-off.
In Washington, an impeachment trial for the president of the United States got underway, but nobody really seemed to care all that much. Investors were infinitely more concerned about bailing out of stock holdings before the losses grew even nastier.
The Dow Jones Industrial Average fell 228.63 points to close at 9120.93, fully erasing its gains for the year, and the S&P 500 was 22.21 lower at 1212.19. The Nasdaq Composite Index shed 39.92 to 2276.89, and the Wired Index was down 12.21 at 592.23.
Despite mixed reviews by industry analysts, Net stocks did their damnedest for much of the day to resist selling pressure. Enthusiasm for the .com crowd was bolstered in part by the latest in a series of estimates -- collect them all -- for how much US shoppers spent online this past holiday season. A survey by Marketing Corp. of America places the total amount at US$8.2 billion, with women spending about twice as much as men.
"Internet stocks have done extremely well," said Rao Chalasani, chief investment strategist at Everen Securities. "It was time for a sensible correction."
Sensible or not, Yahoo (YHOO), Excite (XCIT) and Lycos (LCOS) were all lower after Deutsche Bank Securities downgraded its ratings for the three portals. Analyst Alan Braverman said current valuations don't reflect actual business fundamentals -- like that's news -- but he still remains upbeat about each outfit's long-term prospects. (Legal fine print: Lycos is in the process of acquiring Wired Digital, parent company of Wired News.)
Everen's Chalasani sees the market's current downturn as a fairly natural venting-of-steam following recent run-ups in share prices. And he's not ready to kiss off high-flying Internet stocks just because those towering valuations have traders spooked. "I have no reason to believe yet that they've stopped going up," Chalasani said.
In a sure sign that Net shares retain an undeniable mystique for traders, especially those of the day variety, a no-neck firm called Interiors (INTXL) saw its stock skyrocket 244 percent after the maker of decorative accessories said it will launch an interiors.com site and open an outlet in Yahoo's cybermall.
Similarly, Sunglass Hut International (RAYS) advanced 24 percent after announcing its acquisition of a couple of electronic retailers, shades.com and SwissArmyDepot.com. Morgan Stanley Dean Witter boosted its rating for Sunglass Hut to "strong buy" from "neutral."
Direct marketer Xoom.com (XMCM) jumped 26 percent after cutting promotion deals with eBay and Buydirect.com. Amazon.com (AMZN) slipped $9.50 to $138.50, and America Online (AOL) was down $1.25 at $144.50.
In tech, Apple Computer (AAPL) fell 11 percent to 41.38 on worries that the company won't be able to sustain its holiday-sales momentum into the next quarter. On Wednesday, Apple reported better-than-expected quarterly profit of 78 cents a share, excluding one-time gains. It was the fifth consecutive moneymaking quarter for the rejuvenated firm.
Chipmaker Advanced Micro Devices (AMD) dropped 19 percent to $22.38 after revealing that its own quarterly earnings came up short of analysts' expectations. The company saw profit of 15 cents a diluted share, whereas the Street was looking for at least 19 cents. Rival Intel (INTC) was $5.25 lower at $133.75.
Cisco Systems (CSCO) climbed $50 to $96.38 as Morgan Stanley Dean Witter raised its 12-month price target for the company's stock to $120. Dell Computer (DELL) shed $1.68 to $77.63, and Microsoft (MSFT) was down $2.06 at $141.75.
Eastman Kodak (EK) was a major contributor to the Dow's decline, falling 11 percent to $70.31 after posting lower-than-expected quarterly profit of $1.05 a share. Kodak laid much of the blame for its poor performance on sagging sales in Russia, but said its full-year 1999 earnings could be as much as 20 percent higher than the year before.
Golden Books Family Entertainment (GBFE), a publisher of kids' books, surged 152 percent after The New York Times reported that Disney (DIS) had bought a stake in the firm. Neither company confirmed the story, but seeing as Golden Books opened trading at less than a buck a share, why take chances?
Lastly, Planet Hollywood International (PHL) scored some points with investors by saying it will take a fourth-quarter charge of as much as $160 million as part of restructuring efforts to lower overhead. The company's stock gained 19 percent, despite the fact that sales at its eateries open at least a year were down 19 percent in the latest quarter.
As part of the changes afoot, Planet Hollywood said it will totally revamp its restaurants around the world, including new-and-improved menus. Anyone who's ever sampled their cuisine will see this as a shrewd business move.
