Wall Street took a pounding in mid-afternoon trading Tuesday as investors hurriedly sold off stocks following record-high advances for many share prices. Internet stocks, which had led the way up in recent weeks, were similarly out in front for the trip back down.
The Dow Jones Industrial Average fell 83.67 points to 9536.22, and the S&P 500 was 16.37 lower at 1247.75. The Nasdaq Composite Index shed 51.30 to 2333.29, and the Wired Index was down 25.98 at 622.20.
Investors' nervousness stemmed in part from the Brazilian stock market taking a nose dive. It's something of a rude awakening for US traders that the economic brushfire down in Latin America is still burning.
But the biggest cause of worry is simply that share prices north of the border have risen too far too fast.
"Selling some stocks is to be expected at this point," said Jeff Goverman, research director at Pacific Crest Securities. "If you have stocks going up 100 percent in a day, that's the equivalent of a few years worth of performance. If you see that kind of performance, you're going to sell off shares and take some profits."
Internet stocks, which can chart a lifetime of performance in the span of a few days, took a spill pretty much across the board as traders fled for cover from those Godzilla-sized valuations. Yahoo (YHOO), which climbed more than US$71 on Monday, retreated $18.38 to $396.13 ahead of reporting its fourth-quarter earnings. Analysts are looking for profit of at least 16 cents a share.
Other portal players, which have been at the forefront of recent gains, also got hammered. Lycos (LCOS), soon-to-be-parent of Wired News, plunged $22, or 17 percent, to $109, and Excite (XCIT) was down $8.81, or 11 percent, at $74.94. Infoseek (SEEK) lost ground as well, slipping $3.50 to $84.25, but the damage was limited by enthusiasm for the official launch of Go Network, Infoseek's joint venture with Disney.
Amazon.com (AMZN) slid $17.88 to $166.75 even as CIBC Oppenheimer reiterated a "buy" rating for the company's stock. Oppenheimer analyst Henry Blodget is the same guy who sparked an earlier rally in the bookseller's shares with a once-unimaginable price target of $400. Looks like lightning isn't going to strike twice, at least not for the moment.
Bucking the downtrend, ETrade Group (EGRP) gained $10.75, or 12 percent, to $99.25 on news that the online brokerage will help establish an electronic investment bank, dubbed EOffering. The bank would reduce costs for companies going public by selling shares via the Net, and aims to underwrite its first initial public offerings later this year.
Yahoo isn't the only high-profile firm reporting earnings after the closing bell. Also opening its books is chipmaker Intel (INTC), which is expected come through with quarterly profit of at least $1.06 a share. Still, Intel's stock was caught in the sell-off, shedding $4 to $135.75.
Heads up: Both Yahoo and Intel are expected to announce stock splits with their earnings reports.
Sun Microsystems (SUNW) fell $1.44 to $92.56 even as it prepared to take the wraps off new hardware and software aimed at the booming telecom market. Sun hopes its powerful Netra 1800 server will allow for more stable voice and data networks.
DaimlerChrysler (DCX) lost $1.75 to $103.88 despite growing speculation that the automaker is about to make a play for Japan's ailing Nissan Motor. Officials from both companies are making increasingly suggestive comments that a deal may be imminent.
Along with its Go Network, Disney (DIS) had additional reason to break out the milk and cookies. Team Mickey advanced $2.06 to $37.31 on news that Salomon Smith Barney upgraded the company's stock to "buy" from "hold," and that Goldman Sachs boosted its rating to "market outperform" from "market perform." Could it be that Disney's recent trek through the fiscal wilderness has come to an end?
Lastly, the word out of Chicago is that Michael Jordan has made up his mind, and that he won't be returning to pro basketball when the current season, or what's left of it, gets under way. A retirement announcement is expected Wednesday.
Nike (NKE) dropped $1.94 to $42.44.
