Tech stocks were taking another bath on Thursday as investors continued fleeing the sector in droves, channeling funds instead into cyclical concerns like energy and retailing shares. Confidence in big-name technology companies has all but vanished amid mixed earnings reports.
The Wired Index spilled 19.61 points to 648.11 in mid-afternoon trading, and the Nasdaq Composite Index was 47.24 lower at 2460.04. The S&P 500 fell 18.80 to 1309.64.
After holding firm throughout the morning, the Dow Jones Industrial Average finally slipped into the minus column, losing 18.04 to 10393.62. The blue chips had benefited early on from solid quarterly gains reported by good, old-fashioned industrial powerhouses like Boeing, General Motors, and Ford.
With the entire market now in retreat, it's time to ask: How low can it go?
"I think the Nasdaq can go about 100 points lower," said Peter Green, technical strategist at Gruntal & Co., quickly crunching the numbers on his computer. "There's a 15 percent correction in store for the Nasdaq, and about half that for the Dow."
But he cautions investors not to get too caught up in short-term market fluctuations. "It's a long-term story," Green emphasized. "Technology is going to be around for a long time, and the long-term story's intact."
Could be. Traders have been leery of the tech camp since Compaq Computer scared the bejesus out of everyone with an out-of-left-field profit warning. But since then, Intel has come through with impressive earnings, and now Advanced Micro Devices (AMD) is up US$1.31 at $16.06 after posting a smaller-than-expected loss for the latest quarter. Granted, expectations were sharply diminished as the chip maker issued no fewer than three separate profit warnings in recent months, but, like they say, any port in a storm.
Similarly, Apple Computer (AAPL) once again has blown past estimates with a quarterly income of 60 cents a diluted share, riding tall in the saddle as consumers keep snapping up those candy-colored iMacs. But the company's shares slipped 66 cents to $34.88 as investors played it safe by cashing in on earlier advances.
The same goes for Charles Schwab (SCH), which dropped 14 percent to $118.50 even as it said first-quarter profit more than doubled to 34 cents a share, slightly ahead of estimates. Online brokers have risen so far, so fast in recent days that it's hardly surprising traders would seize on a solid earnings report as a decent excuse to pocket some winnings.
Thus, Ameritrade (AMTD) fell $15.50 to $132.50 after reporting quarterly income of 14 cents a share, or double the anticipated amount. ETrade Group (EGRP), which is slated to announce its own earnings next week, shed 17 percent to $94.
And Delia's (DLIA), the purveyor of teen togs that has refashioned itself as an e-commerce dynamo, plunged 28 percent to $22.13 after warning that sagging sales at its Screem! chain of clothing stores will result in a first-quarter operating loss, and may hammer the company's full-year bottom line.
Considering how Delia's saw its iTurf online unit more than double in value on its first trading day last week, it must be a drag to have the real world crash the party like this and spoil all the fun.
