- The Washington Times - Tuesday, March 13, 2001

Wall Street's technology stock wreck turned into a marketwide rout yesterday. The bleak chain of events started with the Nasdaq Composite Index crashing through 2,000 and ended with huge losses in every major stock index.
The Nasdaq lost 6.3 percent, or 129 points, to end at 1,924, down 62 percent from its record high a year ago.
The Dow Jones Industrial Average plummeted 436 points to 10,208, a 4 percent decline that was its fifth biggest point drop and leaves the blue-chip index 13 percent below its record high.
Wall Street's broadest measure, the Standard & Poor's 500 index, plunged 4.3 percent to 1,180 for a loss of 23 percent since last year that puts it well into bear territory.
More than three stocks fell for every one that rose on the New York Stock Exchange in a day that erased more than a half-trillion dollars worth of stock wealth.
"It feels like panic," said Uri Landesman, portfolio manager at AFA Management Partners LP. "There's a sense that this recession could affect the entire world at the same time. That doesn't bode well for business."
The latest leg of what has become a bear market was fueled by warnings of arrested growth at technology superstars Cisco and Intel and Sweden's Ericsson, prompting worries that the U.S. slump that created the technology crash is spreading to Europe and other corners of the globe.
Growth in Europe, Latin America and Asia is decelerating along with the United States, while Japan has returned to the brink of recession, with its stock market at a 16-year low.
Technology equipment maker Cisco's announcement Friday that deteriorating business conditions are forcing it to cut 8,000 jobs prompted major Wall Street firms to cut their forecasts for growth and profits at companies like Cisco that had looked forward to growth in Europe offsetting setbacks in the United States.
Cisco Chief Executive John Chambers said he saw "initial signs of a slowdown expanding to other parts of the world." Cisco, the most actively traded stock, fell 8.8 percent to $18.81. Other big-name technology stocks that saw major losses included Ciena, Corning, Nortel, Juniper, JDS Uniphase, Microsoft and AOL Time Warner.
"We are particularly concerned about business trends in Europe, which heretofore has been one of the bright spots," said Merrill Lynch analyst Michael Ching.
Sweden's Ericsson, a major telecommunications equipment maker, said the weakening U.S. economy will cause a $510 million loss this quarter. It previously had predicted 15 percent growth.
Ameritrade Holding Corp., a leading on-line brokerage, announced it also will lose money this quarter, prompting downgrades of brokerage stocks.
While the plunge in technology stocks has led all the major averages lower this year, yesterday even stocks that investors typically turn to in a slowing economy such as drug, consumer products and beverage shares fell.
Dain Rauscher investment consultant Bill Barker said the market's decline is the result of several factors, including disappointment that the Federal Reserve isn't lowering interest rates more aggressively. The Fed is expected to cut rates for a third time at the next meeting of its rate-setting committee March 20.
Margin calls might have accelerated yesterday's drop, Mr. Barker said, as the sinking market forced investors to sell stocks to repay brokerage loans.
The biggest frustration, though, is that there's no apparent end to weak earnings. With the end of the financial quarter approaching and earnings-warning season beginning, Wall Street senses the bad news may be just starting.
"We just don't have anything to look forward to," Mr. Barker said. "The interest rate cut we'll get later this month has already been factored into stock prices. The tax bill will probably get hung up in the Senate. And this bad earnings news keeps coming."
Peter Anderson, chief investment officer at American Express Financial Advisors, said that after weeks of drubbing, the market may finally be reaching a bottom. The intensely negative sentiment on Wall Street yesterday seemed like the kind of capitulation that usually precedes a turnaround in the market, he said.
"People are pitching stocks over the side no matter what. They're finally giving up," he said.
But others said the technology stock bubble still may be losing air and have a ways further to go. Billionaire investor Warren Buffett was among those yesterday who recalled the mass euphoria that sent the indexes to record highs this time last year.
"It was as if some virus, racing wildly among investment professionals as well as amateurs, induced hallucinations in which the values of stocks in certain sectors became decoupled from the values of the business that underlie them," he told shareholders in his investment company, Berkshire Hathaway.
This article is based in part on wire service reports.


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