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Overseas Sell-Off Slams Nasdaq; Dow Inches Up

Wall Street: Wave of selling in Asia and Europe hits tech shares, suggesting investors are nervous about lofty valuations.

March 14, 2000|From Times Staff and Wire Reports

The Nasdaq composite index on Monday suffered its biggest loss in three weeks after a wave of selling slammed Internet and other tech shares in Asia and Europe overnight--suggesting many investors are increasingly nervous about tech shares' current heights.

Early today in Asia key markets turned lower again.

On Monday the Nasdaq index ended down 141.38 points, or 2.8%, at 4,907.24, though it recovered from a morning sell-off that took it down as much as 209 points from Friday's record high.

Biotechnology stocks were particularly hard hit.

The broader market also was lower, though the Dow Jones industrial average managed to inch up 18.31 points to 9,947.13.

Traders said the U.S. market opened with heavy selling of tech shares after investors dumped many Asian and European tech stocks overnight, raising fears of a mad rush to take profits after the stocks' stunning gains over the last few months.

In fact, many Japanese Internet-related stocks have been sliding for the last three weeks. Monday's selling just accelerated the trend, driving the Nikkei OTC share index down 8.5% for the day.

"The Asian sell-off carried through to Europe, and it was used as an excuse to sell here," said Henry Herrmann, chief investment officer at Waddell & Reed Financial Inc. in Overland Park, Kan.

In Hong Kong, the Hang Seng index dived 4.1%. In Germany the main share index slid 3.5%, while French shares slumped 2.7%. Much of the strength in those markets this year has been in tech issues.

At midday today the Hang Seng index was down 0.1% while Japan's market also slipped after a morning rally.

Although the Nasdaq index was hammered Monday, trading volume was about 1.7 billion shares--well below recent peaks of 2-billion-plus. Traders said the pullback in volume during the selling was a positive sign.

Still, losers topped winners by 28 to 15 on Nasdaq and by 19 to 12 on the New York Stock Exchange.

Other market indicators fared better than Nasdaq--a rarity so far this year. The Standard & Poor's 500 lost 0.8%. The Russell 2,000 index of smaller stocks slid 2.3%.

"We're seeing the reflection of investors' nervousness, but overall, the outlook remains strong," said John Shaughnessy, chief investment strategist at Advest Inc. in Hartford, Conn.

"There was a lot of chatter over the weekend on the Wall Street [television] shows about the impending doom of the Nasdaq," said Brian G. Belski, chief investment strategist at George K. Baum & Co., in Kansas City, Mo. "The market by virtue of its recent ascent, especially the Nasdaq, has set itself up for a bit of a correction."

The Nasdaq index still is up 20.6% this year after soaring 86% last year.

Among Monday's highlights:

* Biotech, one of the hottest tech sub-sectors this year, was slammed. The Amex biotechnology index dropped 7.9%, its biggest drop since Jan. 4, led by a 24% drop in Chiron Corp.

Chiron, which had gained 41% this year before Monday's session, fell $14.19 to $45.75 after it said a human test of an experimental heart drug didn't help heart patients any more than a placebo.

Other biotech companies also dropped, including Immunex, which fell $27.88 to $185.38; Cephalon, off $5.94 to $57.31; and Alkermes, down $13.88 to $129.

* Major drug stocks also fell sharply. Merck lost $2.56 to $57, and Lilly lost $1.94 to $59.25.

* Among major tech names, Apple fell $4.44 to $121.31, Sun Microsystems lost $3.31 to $90.88 and Gateway fell $3 to $59.50.

But Intel gained $1.94 to a record $122.13 after analyst Dan Niles of Robertson Stephens raised his rating on the stock to "strong buy" from "buy."

And IBM rose $2.44 to $107.69.

In the telecom sector, Qualcomm lost $5.94 to $130.19 and Equant fell $4.31 to $114.75, while Scientific Atlanta jumped $13.75 to $149.19.

* Procter & Gamble gained $3.13 to $56.88. The largest U.S. maker of household goods said Chief Executive Durk Jager bought 50,000 shares Thursday. That was two days after they plunged 31%, when the company warned earnings will miss forecasts. In addition, P&G's top 300 managers decided to take any bonuses in stock options rather than in cash, spokesman Simon Denegri said.

Market Roundup, C14

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

'Dot-Com' Warning?

A trigger for the sharp pullback on Nasdaq on Monday was another plunge overnight in many Japanese Internet-related shares. Weighed down by falling "dot-com" shares, the Nikkei OTC share index has slumped 18% from its recent peak. Weekly closes and

latest:

*

Monday: 2,215.88

*

Source: Bloomberg News

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