November 13, 2000 2:30 PM PST
Election worries, HP earnings drag tech stocks
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HP misses earnings expectations, drops PwC bidNovember 13, 2000
The Nasdaq set a new 52-week intraday low, falling as low as 2,859.39, driven by a combination of uncertainty surrounding the presidential election and disappointing earnings from computer maker HP. The Nasdaq closed down 62.27, or 2 percent, to 2,966.72 and traded as high as 3063.31, a 197 point range.
The day marked the Nasdaq's first close and intraday drop below the 3,000 mark since Nov. 2, 1999.
The Standard & Poor's 500 index fell 14.72 to 1,351.26, while the Dow Jones industrial average dropped 85.70 to 10,517.25.
"There are just no buyers," said Todd Clark, head of listed trading at WR Hambrecht during the markets' lows. "No one is going to do anything until they know how everything in Florida plays out."
In an election standoff that has changed by the hour, Texas Gov. George W. Bush leads Vice President Al Gore unofficially by 388 votes in Florida, as officials continue to recount votes in Palm Beach County.
Declining stocks led advancers by a ratio of more than 13-to-7 on the Nasdaq, which generated a brisk volume of about 2.04 billion shares. Volume on the New York Stock Exchange was also on the active side as 1.11 billion shares exchanged hands, and 17 stocks fell for every 12 that gained.
The markets ended last week on a dismal note, posting declines across the board. The Nasdaq fell 12 percent last week, while the S&P 500 lost 4 percent, and the Dow shaved off nearly 2 percent.
Richard H. Levy, head of block trading at CIBC World Markets, said Wall Street has become fixated on the presidency and is reflecting the chaotic election. "It's hard to be certain of anything," Levy said.
The CNET tech index fell 9.60 to 2,397.13. Losers edged out winners, with 55 of the 97 stocks in the index falling and 42 rising.
On top of the election anxieties, HP's earnings were a "kick in the teeth" to the markets, Clark said.
The computing giant said that net revenue for the quarter ending Oct. 31 was $13.3 billion, compared with $11.4 billion in the same period a year ago. The Palo Alto, Calif.-based company posted profits of 41 cents per share for the quarter vs. 36 cents a share in its year-ago period.
Analysts polled by First Call/Thomson Financial had projected that HP would earn 51 cents per share. Shares of the company fell $5.88, or 15 percent, to $33.25.
CIBC's Levy also believes that the election strife and the further decay of high expectations of the tech sector helped drive the Nasdaq lower. Investors are becoming increasingly skeptical of tech stocks and the U.S. economy when they contrast the sector's high price-to-earnings ratios with the forecasted slowdown in corporate earnings.
"It's not a very healthy situation out there, and with these two guys bickering for another month, it won't get any better," Levy said of Gore and Bush, who are engaged in a public relations battle as Florida officials tediously count votes by hand.
Other PC makers lost ground Monday. Gateway dipped 74 cents to $39, and Compaq Computer fell 46 cents to $25.24. IBM managed to fight the sinking tide and rose $4.44 to $97.44, while Dell Computer climbed $1.13 to $24.13.
Of the 18 sectors tracked by CNET Investor, providers of Internet services and Internet e-tailers posted the largest drops, falling about 5 percent each. Semiconductor companies made the most gains, rising 2 percent.
Ariba took it on the chin in the Internet services sector, falling $9.13, or 9 percent, to $91.38.
VeriSign lost $4.44 to $108.75 and fell as low as $98.50; CMGI stumbled $1.13 to $14.50; and Exodus Communications dropped $3.06, or about 10 percent, to $27.69.
Exodus dropped as low as $26.13, despite a rash of favorable reports from analysts.
Chip stocks helped the Nasdaq cut some of its losses. The Philadelphia semiconductor index rose 27.02, or 4 percent, to 651.22, led by chip equipment maker Teradyne, which gained $4.88, or almost 17 percent, to close at $33.88. Texas Instruments also rose $3.56, or 9 percent, to $42.31.