Nasdaq dives more than 5%

Associated Press

NEW YORK – Stocks fell sharply today, pulling the Nasdaq composite index down 190 points, as disappointing revenue figures from Nortel Networks reawakened the market’s worries about earnings.

Nasdaq fell 190.20, or nearly 5.6 percent, to 3,229.59, according to preliminary calculations.

The Dow Jones industrial average, which alternated between positive and negative territory throughout the day, closed down 66.59 at 10,326.48,. The Standard &Poor’s 500 index fell 33.23 to 1,364.90.

Investors who had shown signs of relaxing about earnings reports in the past few sessions proved they are still nervous about profits, higher energy costs and an economic slowdown.

“They keep getting blindsided,” said Larry Rice, chief investment officer at Josephthal &Co.

Analysts, including Rice, said investors should readjust their outlooks, warning that a consistent stock rally could take a while.

“It’s still not a time to throw caution to the wind,” said Rice, who even warned investors against bargain hunting.

Jack Shaughnessy, chief investment strategist for Advest Inc., said expectations were too high throughout the third-quarter earnings season.

Investors sold off Nortel and analysts downgraded the stock after the fiber-optics maker announced disappointing revenues late Tuesday. Nortel plummeted $18.38, or 29 percent, to $45.

The company, which pulled the Nasdaq lower, blamed its shortfall on a slowdown in optical sales growth, limitations on how fast it could install equipment and inventory glut on the part of its customers. Nortel’s talk about problems in the industry sent it and other networking stocks tumbling.

“When you have an issue like demand being raised, it calls into question the entire sector,” said Arthur Hogan, chief market analyst at Jeffries &Co. “That is really what is causing the drag on the market today.”

Fellow fiber-optic concern Ciena lost $27 to trade at $108.38. JDS Uniphase also was off $24.06 at $71.

Corning, another leader in fiber optics, announced better-than-expected earnings on Monday, but investors still punished it based on Nortel’s performance. Corning dove $13 to $77.

But Hogan remained confident that the downturn was confined to fiber optics and won’t last.

“We will see that this has been overdone tomorrow, and go in and grab some of the bargains that have been created,” Hogan said.

Longer-term relief for the tech-heavy Nasdaq could be in sight Friday when the government releases gross domestic product figures, Shaughnessy said. If economic growth has slowed, the Federal Reserve might consider lowering interest rates before the end of the year.

“They don’t want to see technology companies flounder, because that could undermine productivity growth, which would increase inflation,” he said.

AT&T, which beat third-quarter earnings expectations, was down $3.63, or 13.3 percent, at $23.56 as investors digested details of its widely expected restructuring plan and a warning about fourth-quarter earnings. The telecommunications company was responsible for much of the Dow’s loss.

Declining issues outnumbered advancers by a 2-to-1 ratio on the New York Stock Exchange, where volume came to 1.29 billion shares, compared with 1.15 billion in the previous session.

The Russell 2000 index fell 12.64 to 475.81.

Overseas, Japan’s Nikkei stock average fell 2.03 percent. Germany’s DAX index was down 0.80 percent, Britain’s FT-SE 100 fell 1.10 percent, and France’s CAC-40 was down 0.72 percent.

Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

More in Local News

Members of South County Fire practice onboarding and offboarding a hovering Huey helicopter during an interagency disaster response training exercise at Arlington Municipal Airport on Tuesday, June 6, 2023, in Arlington, Washington. The crews learned about and practiced safe entry and exit protocols with crew from Snohomish County Volunteer Search and Rescue before begin given a chance to do a live training. (Ryan Berry / The Herald)
Snohomish, King counties train together for region’s next disaster

Dozens of agencies worked with aviators Tuesday to coordinate a response to a simulated earthquake or tsunami.

Police stand along Linden Street next to orange cones marking pullet casings in a crime scene of a police involved shooting on Friday, May 19, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Lake Stevens man identified in Everett manhunt, deadly police shooting

Travis Hammons, 34, was killed by officers following a search for an armed wanted man in a north Everett neighborhood.

Ciscoe Morris, a longtime horticulturist and gardening expert, will speak at Sorticulture. (Photo provided by Sorticulture)
Get your Sorticulture on: Garden festival returns to downtown Everett

It’s a chance to shop, dance, get gardening tips, throw an axe and look through a big kaleidoscope. Admission is free.

Funko mascots Freddy Funko roll past on a conveyor belt in the Pop! Factory of the company's new flagship store on Aug. 18, 2017.  (Dan Bates / The Herald)
Lawsuit: Funko misled investors about Arizona move

A shareholder claims Funko’s decision to relocate its distribution center from Everett to Arizona was “disastrous.”

1 stabbed at apartment in Lynnwood

The man, 26, was taken to an Everett hospital with “serious injuries.”

A firefighting helicopter carries a bucket of water from a nearby river to the Bolt Creek Fire on Saturday, Sep. 10, 2022, on U.S. Highway 2 near Index, Washington. (Ryan Berry / The Herald)
Red flag fire warning issued west of Cascades

There are “critical fire weather” conditions due to humidity and wind in the Cascades, according to the National Weather Service.

A house fire damaged two homes around 1:30 a.m. Tuesday, June 6, 2023 in Marysville, Washington. (Photo provided by Marysville Fire District)
Fire burns 2 homes in Marysville, killing 2 dogs

Firefighters responded to a report of a fire north of Lakewood Crossing early Tuesday, finding two houses engulfed in flames.

Dolly Hunnicutt holds onto a metal raccoon cutout while looking through metal wildflowers at the Freeborn Metal Art booth during the first day of Sorticulture on Friday, June 9, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Sorticulture brings gardening galore, fun by the bushel at 130 booths

“Every year there’s something different to see,” one attendee said at the opening of the three-day festival in downtown Everett.

Alex Dold lived with his mother and grandmother, Ruby Virtue, near Echo Lake. His sisters, Vanessa and Jen Dold, often would visit to play board games and watch soccer on television.
Troubled deputies at center of $1.5M settlement in Maltby man’s death

In 2017, Bryson McGee and Cody McCoy killed Alex Dold with their Tasers. Neither of them work for the sheriff’s office anymore.

Most Read