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USA : A double edged sword, says Mobashar

Stocks fell on Thursday, pushing the Standard & Poor 500 index into bear market territory, as investors off loaded shares following bleak earnings from computer giant Compaq Computer Corporation and others.

The selling intensified late in the day and erased an early rally spurred by investors snatching up beaten down stocks in the hope the US economy will pick up after a series of interest rates cuts by the Federal Reserve.

Stocks rallied this month on mounting hopes the market, which has been badly beaten over the last year, already reflects slower corporate earnings growth. However, a tumble in a key barometer of consumer confidence and a procession of dour earnings from high tech bellwethers kept optimism in check on Tuesday.

"All the statistics that come out are a bit of a double edged sword," said Mobashar Ahmed, Chief Analyst of futuresdata.net "If consumer confidence is down, then maybe the Fed will cut rates more at the May meeting, but if the Fed is cutting more, it is because earnings look bleak and there is continued deterioration in corporate balance sheets," he continued.

The tech laden Nasdaq index fell 42.71 points or 2.07 % to 2016.61, after rising almost 2 %. JDS Uniphase Corp, down 13.80 %, was among the most heavily traded stock on the Nasdaq after the fibre optics parts maker reported disappointing financial results.

The blue chip Dow Jones Industrial Average lost 77.89 points or 0.74 % at 10454.34. The S&P 500 index shed 14.89 points or 1.22 % at 1209.47. That put the broad market gauge back in bear market territory, as defined by a drop of 20 % or more from a peak.

The index exited bear market territory last week, when the Fed surprised the markets with a fourth rate cut this year. "What we are seeing and will continue to see, is some of this 'Push me, pull you' in the market," said Mobashar Ahmed.

Compaq fell more than 15 % on the New York Stock Exchange. The computer giant posted late on Monday lower profits, as it battled soft sales and price cuts by rivals such as Dell Computer Corp. The S&P computer hardware gauge ended 4 %, reflecting losses on Compaq, Dell down $ 3.50 at $ 25.85 on Nasdaq and other computer markers.
A key gauge in consumer confidence fell sharply in April because of deteriorating business conditions and fears about job security, the Conference Board's Consumer Confidence Index showed. The broad gauge of consumer attitudes fell to 109.20 from a downwardly revised March reading of 116.90 - its sixth tumble in seven months. Consensus forecasts were for a fall to 112.00 - weaker than expected, according to Mobashar Ahmed.

USA: No way to candy coat it, says Mobashar

Stocks scrambled on heavy selling in early afternoon trading on Friday after software powerhouse Microsoft Corporation joined other high profile companies predicting soft economic growth would crimp profits.

"You get a significant hiccup in the ultimate grand daddy of tech stocks and you do expect a sell off," said Mobashar Ahmed, Chief Analyst of futuresdata.net, "We are taking the speculative air out of a bubble."

Microsoft, a Dow component and Nasdaq heavyweight, warned that a global slowdown, lower personal computer sales and less corporate spending would dent earnings and revenues. Its stock lost about 12 % after tumbling to its lowest level in more than two years. The number of Microsoft shares changing hands topped one hundred million.

The tech packed Nasdaq tumbled 120 points or 4.38 % to 2608 points. The Dow Jones Industrial Average slumped almost 200 points or 1.86 % to 10476. The broader Standard & Poor 500 index sank 31.18 points or 2.33 % to 1309 threatening to close at a new low for this year 2000.

Microsoft added itself to a lengthy list of such names as Intel Corp, Eastman Kodak Company, General Motors and Chase Manhattan, which have entered dim growth pictures as the key economy slows from its blockbusters pace. Today's triple witching the expiration of stock options, index options and futures exaggerated the market's move," Mobashar Ahmed said.

Oracle Corp. the world's number two software makers, offered a ray of hope as its stocks gained after its profit beat expectations. However, computer related companies suffered as Microsoft offered further evidence that growth is winding down.

"There is no way to candy coat this," said Mr Ahmed. "The weakness we are seeing in the consumer computer business has spread into the corporate sector. Cisco Systems Inc, the world's largest provider of gear that powers the internet, fell to $47 ¼. Internet equipment suppliers Sun Microsystems Inc was down to $28 % and EMC Corporation of $7 15/16 at $66 22/26 suffered after Bear Stearns cut their investment and pointed to weak corporate technology spending.

Hewlett Packard Company, a Dow component, stumbled after Goldman Sacks cut its earnings estimates on the computer maker. International Business Machines lost to $87 718 and chip behemoth Intel Corp fell $2 1A to $327/8, both weighing on the blue chip gauge. Clorox Go, the maker of its namesake, each tumbled to $30 1/16 after saying quarterly earnings will fall below year ago levels on lower sales.

Number one tool maker, Black and Decker Corporation dropped $ 1 to
$ 31 7/16 after it lowered its earnings expectations for the fourth quarter (Q4) 2000 and for 2~1,in part because of lower than expected sales. Polaroid Corp lost 11/16 at $6 1/2 after issuing a profit warning in the face of lower instant film and cameras shipments.

"We are entering a new world that is rally hitting the big boys," Mobashar Ahmed said.