Eng/ Nat
Wall Street's frustration with technology stocks intensified Thursday after an earnings warning from PC maker Gateway sent the market tumbling.
The drop briefly pulled the Nasdaq composite index under 2,524, about 50 percent below the closing record it set in March.
The mood on the Nasdaq Thursday spread to the Dow as well, sending the industrials skidding more than 300 points before the selling frenzy seemed to slow down later in the day.
SUGGESTED VOICE-OVER:
Both markets in New York took a tumble Thursday as technology companies continued a decline that began in early September.
The general malaise on the Nasdaq spread to the Dow -- which was down 300 points in the early afternoon to end down 2.4 percent or 254.82 at 10,374.29.
In late afternoon trading, the Nasdaq was down 108.86 at 2,598.07, a 4 percent loss, after sliding as low as 2,523.04 - about half of its March 10 close of 5,048.62.
The Nasdaq is trading at its lowest levels since early August 1999.
Gateway fell $1.95 to $18.35, giving it a loss of 41 percent over two days. The stock, which a year ago was trading at more than $80 per share, was also downgraded by several analysts.
The broader Standard & Poor's 500 index was also off 32.85 at 1,309.08.
SOUNDBITE: (English)
"Well, I think from a 30 thousand foot view what's happening is that we've had a lot of liquidity put into the system from the Asian crisis in 1998 and that liquidity is starting to come out and our money supply is growing, credit is tightening, and basically we saw inflation in technology stock prices, now we're seeing deflation, if you will. From a fundamentals standpoint we're seeing slowing, the economy is slowing."
SUPER CAPTION: Steve Milunovich, Merrill Lynch Technology Strategist
The drop continued a slide in technology companies that began after Labor Day, when it first appeared that the volatile sector would perform poorly in a slowing economy.
Thursday's selling, which spilled over to the rest of the market, appeared directly related to Gateway's announcement late Wednesday that its holiday sales were weaker than expected.
The market's fears were compounded by a Commerce Department report showing Americans' personal income slipped 0.2 percent in October, the first decline in nearly two years. The report also found consumer spending rose by the smallest amount in six months.
The dragging out of presidential election has also taken its toll on the markets recently, adding to today's losses.
SOUNDBITE: (English)
"Well, I think the election probably doesn't have that much to do with the slump in the market but there does come a point where there's a level of frustration and it's a truism that the market doesn't like uncertainty, of course things are always uncertain, but I think the longer it drags on, it just contributes to that sort of somber mood of lack of earnings, of how fundamentals are poor, stocks are going down and we still don't have a president."
SUPER CAPTION: Steve Milunovich, Merrill Lynch Technology Strategist
Analysts say, however, that a year-end rally may still be in the cards, although where the bottom will be before then, is difficult to tell.
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