Quiet in the Casino
There’s very little action, and even less upside, and a positive purchasing report leaves investors unmoved. The Nasdaq and Dow both slip.
The only investors who came back to the markets after the July 4 holiday were selling. But as expected, volume has been light across the board. At noon EDT, the Nasdaq was down 40.7, or 1.9 percent, to 2100.10. The Dow Jones Industrial Average fell 96.68, or 0.91 percent, to 10474.43. The Standard & Poor’s 500 lost 13.24, or 1.07 percent, to 1221.21. The Industry Standard 100 was down 9.74, or 2.4 percent, to 394.29.
Even news from the National Association of Purchasing Management that the services sector showed signs of growth in June couldn’t stimulate buying this morning. The NAPM nonmanufacturing services index came in at 52.1 for June, as new orders picked up and price hikes slowed. Any number above 50 shows expansion in the sector, but employment in the sector continues to decrease.
Meanwhile, the weekly initial unemployment claims number – below 400,000 for the second-straight time last week – came in higher than Wall Street had expected, indicating that June’s employment report, due Friday, isn’t looking too promising.
In addition, next week’s earnings reports are hanging over traders’ heads, and many investors are planning to sell their positions in weakened tech stocks. In the wake of a warning from department-store heavyweight Federated, investors are likely to sell off stocks in the weakened retail market, as well.
Missouri-based telco and data services provider WorldCom benefited from the little upside that was available in Thursday’s trading. The stock is up 13 cents, or 0.9 percent, to $14.60, after the company announced that it will alter the way it accounts for its 19 percent stake in Brazil’s Embratel. WorldCom updated its fiscal 2001 guidance because it will no longer consolidate Embratel’s revenue and earnings in its overall finances, and also reaffirmed its second-quarter (June) guidance.
But the rest of the tech market appears weak. British communications hardware and software player Marconi was getting hit the hardest, down $3.83, or 54.5 percent, to $3.20. The company said Wednesday that it expects to break even for the first half of the year and rebound a bit in the second half, but it said the telecom capital-spending environment has continued to deteriorate against the company’s initial projections.
Shares of the Swedish telecom equipment vendor Ericsson also succumbed to selling pressure, losing 71 cents, or 12.8 percent, to $4.83. Nokia, Lucent and Corning have given up nearly 7 percent of their value, while Nortel gave up just 3 percent. Also falling were optical-components players Ciena and JDS Uniphase, down just more than 5 percent. Exodus Communications and Level 3 Communications also dropped.
Massachusetts-based Parametric Technology Corporation was feeling the heat of its own warnings Thursday, down $2.44, or 19.7 percent, to $9.93. The company said third-quarter revenue will be slightly lower than previous guidance as earnings, excluding charges, will come in between 2 cents and 4 cents, down from a previous range of 6 cents to 10 cents. The e-commerce solutions player apparently helped pull down shares of i2 Technologies, BEA Systems and Commerce One, among other commerce software players.