Stock Markets Decline on News of Tech Woes
Hill, Patrice, The Washington Times (Washington, DC)
Wall Street's technology stock wreck turned into a marketwide rout yesterday. The bleak chain of events started with the Nasdaq Composite Index crashing through 2,000 and ended with huge losses in every major stock index.
The Nasdaq lost 6.3 percent, or 129 points, to end at 1,924, down 62 percent from its record high a year ago.
The Dow Jones Industrial Average plummeted 436 points to 10,208, a 4 percent decline that was its fifth biggest point drop and leaves the blue-chip index 13 percent below its record high.
Wall Street's broadest measure, the Standard & Poor's 500 index, plunged 4.3 percent to 1,180 for a loss of 23 percent since last year that puts it well into bear territory.
More than three stocks fell for every one that rose on the New York Stock Exchange in a day that erased more than a half-trillion dollars worth of stock wealth.
"It feels like panic," said Uri Landesman, portfolio manager at AFA Management Partners LP. "There's a sense that this recession could affect the entire world at the same time. That doesn't bode well for business."
The latest leg of what has become a bear market was fueled by warnings of arrested growth at technology superstars Cisco and Intel and Sweden's Ericsson, prompting worries that the U.S. slump that created the technology crash is spreading to Europe and other corners of the globe.
Growth in Europe, Latin America and Asia is decelerating along with the United States, while Japan has returned to the brink of recession, with its stock market at a 16-year low.
Technology equipment maker Cisco's announcement Friday that deteriorating business conditions are forcing it to cut 8,000 jobs prompted major Wall Street firms to cut their forecasts for growth and profits at companies like Cisco that had looked forward to growth in Europe offsetting setbacks in the United States.
Cisco Chief Executive John Chambers said he saw "initial signs of a slowdown expanding to other parts of the world." Cisco, the most actively traded stock, fell 8.8 percent to $18.81. Other big-name technology stocks that saw major losses included Ciena, Corning, Nortel, Juniper, JDS Uniphase, Microsoft and AOL Time Warner.
"We are particularly concerned about business trends in Europe, which heretofore has been one of the bright spots," said Merrill Lynch analyst Michael Ching.
Sweden's Ericsson, a major telecommunications equipment maker, said the weakening U.S. economy will cause a $510 million loss this quarter. …