What a difference a year makes. One year ago, on March 9, 2000, the Nasdaq Composite closed above the 5,000 level for the first time. One tech wreck, one election standoff, two rate hikes and two rate cuts later, the index has dropped about 60%.
The ugliness continued Friday. Stocks finished with triple-digit losses after an earnings warning from Intel Corp. (INTC ) triggered a high-tech selloff, and the stronger-than-expected February employment report dashed speculators' hopes of quick Federal Reserve action. The selloff was a far cry from the buying mood earlier in the week, which sparked a 3-day winning streak Monday through Wednesday. Many on Wall Street, meanwhile, were looking for a bottom.
Investors are using the Intel warning and jobs report to unload stocks, John Dale, manager of Wells Fargo Funds:Large Company Growth/I (NVLCX), told Standard & Poor's Advisor Insight. But Dale added the worst of the downturn in the market is over.
Other market observers agreed. "I personally think we're in a U-turn, a slow U-turn, however," Elizabeth Bramwell, manager of Bramwell Growth Fund, told Standard & Poor's.
The government said the economy created 135,000 new jobs outside the farm sector in February compared to the 62,000 Wall Street had expected, and a revised 224,000 in January. The unemployment rate held at 4.2%, despite recent suggestions from Fed officials that it would eventually rise, according to news reports. Before the data, the market had expected the Fed to cut rates by a half-point at its March 20 meeting.
In technology, top chipmaker Intel (INTC ) on Thursday also announced 5,000 job cuts. Intel also said first quarter revenue would fall about 25% below fourth quarter levels, as the cooling U.S. economy hit personal computer demand and spread to the networking, communications and server sectors. Shares of Intel finished lower, along with stocks of semiconductors and Internet stocks.
The Dow Jones Industrial Average closed down 214.28 points, or 1.97%, to 10,643.97. The Nasdaq finished off 115.95 points, or 5.35%, to 2,052.78. The S&P 500 ended down 31.46 points, or 2.49%, to 1,233.28.
Treasuries finished lower following the stronger-than-expected jobs report for February. Standard & Poor's economic research unit noted that with treasuries priced for perfection, the payrolls data were too far above pessimistic median forecasts of a gain of 75,000 versus the actual rise of 135,000.
Stocks in the News
U.S. natural gas producer Barrett Resources Corp. (BRR ) on Thursday said it had rejected European oil giant Royal Dutch/Shell's $1.8 billion cash offer for the Denver-based company and planned to invite other companies to make competing bids: Reuters
The Securities and Exchange Commission is investigating stock sales by Jeffrey Bezos, the chairman of Internet retailer Amazon.com Inc. (AMZN ): New York Times online
European markets finished down. The London Financial Times-Stock Exchange 100 index closed off 85.90 points, or 1.43%, to 5,917.30. In Germany, the DAX Index ended down 62.56 points, or 1%, to 6,204.50. Meanwhile, France's CAC 40 Index closed down 69.77 points, or 1.28%, to 5,368.89.
In Asia, the markets also ended lower. Japan's Nikkei 225 Index closed down 22.66 points, or 0.18%, to 12,627.90. Hong Kong's Hang Seng index, meanwhile, finished down 14.60 points, or 0.10%, to 14,194.35.