Wall Street took a pounding Tuesday as traders looked in vain for encouraging signs of economic well-being. All they found instead was trouble abroad and the increasing probability of a slowdown at home.
Will Al "The Investor's Pal" Greenspan, now meeting with other Fed bigwigs, come riding to the rescue again? Don't count on it.
The Dow Jones Industrial Average fell 71.58 points to close at 9274.12. The Nasdaq Composite Index shed 46.43 to 2463.66, and the S&P 500 was down 11.01 at 1261.99.
The bargain hunters arrived just before the closing bell, helping mop up a portion of the session's earlier damage. But the room was still a mess.
Greenspan and his posse are now in a two-day meeting of the Federal Open Market Committee. Because no one is expecting the crew to tinker with interest rates, investors are playing it cautious by selling off shares to lock in gains from recent advances. The Fed get-together concludes Wednesday afternoon.
"The bulk of earnings reports are out, so there's an absence of good news," said Christine Callies, chief investment strategist for Credit Suisse First Boston. "There won't be more good news for a while."
By that she means the market likely will show increased volatility in coming weeks, and is expected to ultimately lose ground -- perhaps by as much as 10 percent -- through the first quarter. With such downbeat predictions floating around, is it any wonder many investors are bailing out of stock positions before the storm hits?
Sentiment wasn't helped by news that Brazil's central bank president has been tossed out less than a month after being appointed to the thankless job. On top of that, Japan hiked its interest rates, and Tokyo's financial point man, Eisuke Sakakibara, warned of worsening trade friction between his country and the United States. Then again, he also said that "the only thing I'm optimistic about is the Japanese economy," so there's some question as to his current state of mind.
From the earnings front, Sprint (FON) dropped US$2.25 to $81.94 after reporting quarterly profit of 79 cents a diluted share, excluding one-time gains. This was an increase of 13 percent over a year before, but still 6 cents short of analysts' estimates. Sales nearly tripled for Sprint's wireless unit, Sprint PCS, but its losses were also up.
Broadcast.com (BCST) fell $8.44 to $143 after Intel filed with the Securities and Exchange Commission to sell more than 300,000 shares in the online broadcaster. While the chipmaker says it routinely fiddles with its portfolio depending on market conditions, this isn't the most glowing vote of confidence in Broadcast.com's future prospects.
"The whole technology sector has been white-hot, and Internet stocks have been along for the ride," Callies said. "Once technology stumbles, the Internet stocks will go down twice as fast."
Meantime, MovieFone (MOFN) climbed 14 percent to $30.25 following announcement of its $388 million acquisition by America Online (AOL). But AOL was down $3.94 at $167.25 as traders mulled how the movie-listing and ticketing service will mesh with the online service's operations.
Speaking of meshing, eBay (EBAY) is expanding its marketing relationship with Netscape Communications' NetCenter portal, opening the door to increased traffic to its online auction service. But this otherwise cheerful news wasn't enough to resist the market's prevailing winds, and eBay was $7.75 lower at $254.25.
Lycos (LCOS), on the other hand, rose $6.50 to $133.94 after moving to allay recording companies' fears that its new online music directory will turn into a playground for pirates. Lycos said it will avoid linking to sites known to offer contraband tunes -- a more conciliatory stance than its initial position that it can't be held liable for the deeds or misdeeds of linked sites. Lycos is now in the process of acquiring the parent company of Wired News.
In IPO action, Perot Systems (PER), the Texas data-services firm founded by leprechaun presidential wannabe Ross Perot, more than doubled to $41.88 in its trading debut. The company sold 6.5 million shares initially priced at $16 apiece.
Cisco Systems (CSCO) slipped $2.56 to $112.44 ahead of reporting its quarterly results. Profit of at least 35 cents a share was expected, and a stock split also may be in the cards.
Elsewhere in tech, Dell Computer (DELL) rose 63 cents to $108.63, and Intel (INTC) was down $3.25 at $134.63. Microsoft (MSFT) lost $5.31 to $167.63.
PeopleSoft (PSFT) declined 19 cents to $18.56 after being socked with lawsuits alleging the business-application publisher defrauded shareholders by inflating the company's stock value for the past couple of years. This is a fine how-do-you-do after PeopleSoft last week reported lower-than-expected quarterly results and said it would be handing pink slips to about 450 workers.
In biotech, Cell Pathways (CLPA) tumbled 67 percent to $9 after the company said it likely would delay filing for a new drug application for its Prevatac cancer medication because it worked only as well as placebos in trials. This, of course, is not a particularly auspicious result.
Lastly, an outfit called Notify Technology (NTFY) soared 384 percent to $9.38 after issuing a press release saying it had developed "visual 'Got Mail' technology that will allow home users to see that they have new email without turning on their computers."
Huh?
In fact, a Notify official tells Market Cap that the technology is actually a gadget that fits between your computer and your telephone jack, and automatically keeps tabs on your Internet service provider throughout the day. When there's email waiting in the inbox, a little light flashes beside your telephone.
Cool.
