High-Tech Wreck On Wall Street
A sell-off Monday was a brushfire that burned nearly every red-hot, high-tech stock, as NASDAQ's second-biggest point plunge ever took the Dow with it.
Market watchers say that after the rapid run-ups of more than 200 percent in some tech stocks, the fall was inevitable reports CBS News Correspondent Anthony Mason.
The NASDAQ composite index ended the day down 5.6 percent and erased a 270-point gain in the Dow Jones industrials.
At the close of trading on Wall Street, the technology-heavy NASDAQ was down 138.19 points to 2,345.85. The only steeper one-day point drop was on Aug. 31, 1998, when it slid 140.43 points, or 8.6 percent.
The Dow Jones industrial average ended a five-day string of record highs by falling 53.36 to close at 10,440.53. Earlier in the day the Dow had surged up 271.85 points to reach 10,765.74.
The Dow had easily cruised through the 10,500, 10,600 and 10,700 levels. But as investors saw the NASDAQ crumble under the weight of huge losses in technology shares, they began to sell blue chips as well, cashing in on a week of gains.
"I think the NASDAQ undermined everything else," said Larry Wachtel, a market analyst at Prudential Securities. "I think it was the decimation of everything tech, everything Internet, everything healthcare" that finally led investors to take profits.
"If you owned a big winner this year, you got whacked today," Wachtel said. "They just got around to (selling) the extraordinary winners of 1999. It had the ring of inevitability."
Volume was close to a record, with more than 1.2 billion shares changing hands on the Big Board, where advancing issues had a strong 2-to-1 lead on decliners despite the sell-off among blue-chip issues.
The Standard & Poor's 500 composite was down 29.49 at 1,289.52.
In a continuation of last week's trend, technology stocks took body blows. Dow member IBM was down nearly 4. AOL had plunged nearly 20 in leading volume on the Big Board.
The industrial stocks that did so well last week can't play the role of long-term leaders because they represent a much smaller portion of the market than technology shares do, said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum.
"At some point in time, the tech stocks have to participate again if we're going to get a major rally here," he said.
Compaq dipped lower after giving up earlier gains. The computer maker, which stunned Wall Street with dismal earnings projections earlier this month, disclosed on Sunday that chief executive Eckhard Pfeiffer had been ousted and its chief financial officer was leaving.
Some industrial shares held on. Dow components International Paper, Minnesota Mining and Manufacturing and United Technologies were all higher.
Strong earnings reports pushed some stocks higher. BankAmerica and Dow member Citigroup were both higher on earnings that surpassed analysts' expectations.