NEWS AND COMMENTARY
November 10, 2000
More Softness For Equities: Downgrades In Dell And Intel Weigh
By Julie Rannazzisi, CBS.MarketWatch.com
Hidden Forces Behind Stock Market Plunge ... Weiss comments
NEW YORK - The major indexes remained sharply lower Friday in the wake of Dell Computer's more cautious sales outlook going forward. A cluster of negative analyst comments for the PC maker and a downgrade of Intel kept the bears firmly in charge in the tech sector.
PC stocks paced declines in the tech group following Dell's plunge. In addition, a high-profile downgrade from Morgan Stanley Dean Witter of both Intel and Dell shares weighed on sentiment. In the broad market, only oil, bank and utility shares saw their shares step into the plus column while brokerage and retail sales slumped.
Meanwhile, the market has to live with political uncertainty as the election deadlock continues -- which should prevent investors from taking on any meaningful positions.
An unofficial final tally by the Associated Press showed that Republican nominee George W. Bush held a tiny lead of 327 votes over Democratic nominee Al Gore.
The entire nation is in the grip of election mayhem -- and political uncertainty is crushing the markets. Yesterday, one remark by Gore Campaign Chair Richard Daley sent the Dow plunging nearly 300 points and the Nasdaq tumbled to close to its lows for the year. Though the stock market rebounded, the underlying weakness in the market remains.
This morning, the market's swift drop at the open shows that stocks are far from stable. Part of the weakness is due to "indecision 2000." But there is another factor weighing on the market -- one that won't go away when the next President has finally been named. And that is, most of the stocks in the markets today are overvalued by 50%, 75%, even more!
For years, market euphoria and a booming economy let investors turn a blind eye to these overvaluations. Today, though, things have changed. Away from the glare of the spotlight on election updates, more and more companies are quietly issuing bad news. Investors punished Dell's stock when the company confessed that next year's revenue will fall short of earlier projections.
And Wall Street analysts are finally catching up with what you and I already know. Intel got hit with a downgrade from Morgan Stanley Dean Witter, and Bank of America lowered its ratings on a host of other chipmakers.
The market slide has been going on for awhile -- and it's not over yet. The election turmoil may be accelerating the market's descent, but you can bet the market will continue to sink even when the political uncertainty is resolved.
Brace yourself -- there's a steep drop dead ahead!