Posted on: Thursday, September 25, 2003
Traders expected Nasdaq's tumble
| • | OPEC cut catches market off guard |
By Amy Baldwin
Associated Press
NEW YORK — The technology-dominated Nasdaq composite index suffered its biggest one-day point loss in nearly 15 months yesterday after OPEC's surprise decision to cut oil production sent stocks tumbling. The Dow Jones industrials plunged 150 points.
News that oil producers were lowering their output starting in November exacerbated a selloff that was already under way on Wall Street yesterday. But analysts still attributed much of the downturn to the market being vulnerable, especially in technology, to selling following its big six-month rally.
"You are coming to the end of the quarter and people are a little worried that prices might be extended. To see some profit-taking at the end of the quarter is no surprise," said Richard A. Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Fla.
Larry Wachtel, market analyst at Wachovia Securities, agreed. He said many market watchers have been wondering when stocks would really pull back, because recent selloffs have been short-lived and replaced by more buying.
"You are overextended, overbought, overdone. You have no juice left on the upside," said Wachtel, who called the OPEC news "an excuse" for investors to cash in some gains.
The Nasdaq closed down 58.02, or 3.1 percent, at 1,843.70. The last time the Nasdaq had a larger one-day loss was July 1, 2002, when it shed 59.41 to close at 1,403.80.
Wall Street's other major gauges saw their biggest losses in just over four months. The Dow fell 150.53, or 1.6 percent, to 9,425.51. The Dow hadn't had a bigger one-day point since May 19, when it forfeited 185.58.
The Standard & Poor's 500 index declined 19.65, or 1.9 percent, to 1,009.38. The last time the S&P had a larger one-day point loss was also May 19, when it gave back 23.53 to close at 920.77. Investors are becoming more cautious, wondering if stock prices are too high given six months of rallies and whether third quarter and yearly earnings would be good enough to support Wall Street's gains.
Trepidation increased yesterday after the Organization of Petroleum Exporting Countries announced it would cut its oil production target by 3.5 percent beginning in November, an unexpected move that caused Wall Street to worry that higher energy prices will undermine the economic recovery and corporate profits. OPEC produces about a third of the world's crude.
Wall Street's weakest spot yesterday was the technology sector. Analysts said that was simply because investors have been doing the most buying in high-tech since the market started rallying back in March.
"That is where most of the excess has been," said Wachtel, noting that the Nasdaq has surged nearly 50 percent from its March 11 low of 1,271.47.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange. Consolidated volume totaled 1.96 billion shares, up from 1.70 billion on Tuesday.
