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July 27, 2000

Nasdaq Market Drops On Profit Jitters
By David Runk,

Tech Wreck Reincarnation ... Weiss comments

NEW YORK - Technology stocks dropped Thursday afternoon, pressured by earnings news from WorldCom, Nokia and But blue chips moved higher after the release of U.S. employment-cost data offered encouragement about the inflation picture.

At 1 p.m. EDT, the Nasdaq Composite Index was down 108.02, or 2.7%, at 3879.70, extending Wednesday's 1% loss. But the Dow Jones Industrial Average was up 53.38 at 10569.86, recovering some of Wednesday's 183-point drop.

Other major indexes were mixed. The Standard & Poor's 500-stock index inched up 0.04 and the New York Stock Exchange Composite Index gained 2.32, but the Russell 2000 Index of small-capitalization stocks sank 9.78, or 1.9%.

Continued worries about corporate profits in the second half and disappointment with second-quarter earnings sent technology stocks lower. Telecommunications, semiconductor and Internet shares were among the hardest hit in the wake of earnings news.

This is certainly not the year of the tech stock. In a replay of April's tech wreck, the Nasdaq has been on a slide since last week, and is nearing its lows for the year. Dismal earnings forecasts have sent investors running for the blue-chip stocks of the Dow.

However, Dow stocks are not exactly a safe haven. Today, the Dow is buoyed by investors fleeing tech stocks, but tomorrow, investors are likely to reflect on the economic news indicating inflationary pressures and punish all stocks, 'blue-chip' or not. Employment costs may have been in line with estimates, but jobless claims hit a three-month low proving that the labor market is still tightening. And, durable goods orders were surprisingly robust - a signal that the U.S. economy may still to be too strong to ward off another rate increase by the Federal Reserve.

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