MARKET REPORT
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Earnings worries in the embattled tech sector strangled a mid-morning rally
of 60 points for the Nasdaq Composite Index which closed down for the
second day, and now barely above the 3,000 mark.
Two small cap indexes inched their way back into positive territory in the
final minutes of trading, with the benchmark Russell 2000 Index gaining
0.97, or 0.2%, to 482.61, while the S&P 600 added 0.76, or 0.36%, to
212.58. The Wilshire Small Cap 1750, however, ended in negative territory,
losing 5.49, or 0.7%, to 790.48.
As the session drew to a close tech stocks regained their momentum, pushing
the tech-weighted Nasdaq Composite Index back up above 3,000 but still off
4.69, or 0.15%, to 3027.19, after falling 134 points Thursday.
"The dominant story going forward will remain the deteriorating fundamental
look in technology," said Barry Hyman, chief investment strategist for
Weatherly Securities. "It isn't something that is overcome in a short
period of time."
Shares of business-to-business software-services firm Software Spectrum
Inc. (NASDAQ: SSPE) plummeted 2 7/16, or 23.9%, to 7 3/4 on volume of
54,600, after the company reported a second-quarter operating loss of 25
cents a share, reversing a profit of 44 cents for the same period a year ago.
Shares of other business software stocks fell, too, with NetIQ Corp.
(NASDAQ: NTIQ) dropping 12 7/8, or 13.1%, to 85 3/4, while Serena Software
Inc. (NASDAQ: SRNA) lost 10 1/8, or 19.5%, to 41 3/4.
Checking in on blue chip stocks, the Dow Jones Industrial Average lost
26.16, or 0.25%, to 10,629.87, while the broader S&P 500 lost 4.11, or
0.3%, to 1367.21.
Semiconductor stocks revived after a morning sell-off that saw losses at
near 3%, after yesterday's downgrade by Merrill Lynch on five big chip
stocks. The Philadelphia Semiconductor Index of large cap computer-chip
stocks was down 0.52%, or 3.51 points, to 671.54 in afternoon trading.
Hyman was especially critical of investors in Nortel Networks Corp. (NYSE:
NT), who, he said, were wrong in thinking it could supplant the likes of
Cisco Systems Inc. (NASDAQ: CSCO) and Lucent Technologies Inc. (NYSE: LU)
in the optical networking sector.
"Nortel has become a bigger disaster than either one in a short period of
time," Hyman said. "It is just outrageous that the stock should have ever
traded at 100 times price to earnings."
Nortel's woes spelled disaster for the Toronto Stock Exchange, of which
Nortel comprises 30%. Morning selling saw the TSE drop nearly 200 points,
but by market close, it cut its losses to 11.22, or 0.13%, to 8953.01,
adding to 300 points worth of losses over the past two sessions.
In other Canadian trading, The Canadian Venture Exchange continued to add
to Thursday's losses by dropping another 8.43 points, or 0.3%, to 3132.51.
Some of the market volatility could be attributed to a ruling by a Florida
judge who ruled the state doesn't have to accept the results of hand counts
currently underway in two counties.
There appeared to be a "big relief rally when they figured Bush won," noted
Brian Finnerty, managing director and market strategist at C.E. Unterberg
Towbin Co. "Now we're back down. I don't know whether it's because they
figure Gore's going to appeal or it's just back to reality in the marketplace."
Earlier Friday, the Census Bureau reported October new-home construction
rose 0.1% to an annual rate of 1.532 million, less than consensus estimate
of 1.55 million, but a hair's breadth higher than September's 1.53 million.
Investors didn't seem to place too much significance on the housing-starts
figure as futures markets moved little following its release. This number
is considered a good leading indicator of consumer spending in general.
Housing starts can predict the demand for consumer goods because new-home
buyers continue to buy household goods for several years after purchasing a
new home.
The week's fresh economic data has done little to ease investor fears.
Indeed the Fed's meeting on Wednesday actually intensified investor concern
over an overly strict monetary policy.
Yesterday, the Labor Department reported the Consumer Price Index and its
"core" rate, which excludes volatile energy and food prices, rose 0.2% in
October. Each was in line with Wall Street estimates.
In currency markets, the Canadian dollar fell 0.3% to US$0.6414 from
US$0.6434, while in late New York trading, the euro moved lower to around
US$0.8490.
In commodities news, energy futures regained some strength after edging
lower in morning trading. December crude oil futures advanced 33 cents, or
0.9%, to $35.45, after giving up 46 cents Thursday. December natural gas
added 30 cents, or 5.2%, to $6.10, and December gold lost 10 cents to $266.20.
