US stocks fall sharply on OPEC cut
The technology-dominated Nasdaq composite index suffered its biggest one-day point loss in nearly 15 months today 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 by 3.5% from November exacerbated a sell-off which was already under way on Wall Street.
Larry Wachtel, market analyst at Wachovia Securities, said many observers have been wondering when stocks would really pull back, because recent sell-offs 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 58.03, or 3.1%, at 1,843.69. 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 also tumbled. The Dow fell 150.53, or 1.6%, to 9,425.51. The Standard & Poor’s 500 index declined 19.65, or 1.9%, to 1,009.38.
Wall Street’s weakest spot today 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% from its March 11 low of 1,271.47.
Among today’s tech losers, Microsoft Corp. fell 1.14 to 28.46, Intel Corp. dropped 1.16 to 27.78 and Cisco Systems Inc. declined 83 cents to 20.32.
Media stocks also contributed to Wall Street’s losses after Viacom Inc, owner of CBS and MTV, cut its full-year earnings forecast, saying local advertising did not increase as much as had been anticipated. Viacom fell 1.42 to 38.81, The Walt Disney Co was down 39 cents at 19.92, and AOL Time Warner Inc dropped 47 cents to 15.76.
Among gainers, The JM Smucker Co. climbed 1.81 to 43.58 after Deutsche Securities raised its recommendation on the food maker to “buy” from “hold”.
ESS Technology Inc advanced 36 cents to 10.51 after the maker of multimedia chips raised its third-quarter outlook to a range of a loss of 3 cents a share to a profit of 2 cents a share from an earlier range calling for a loss between 3 and 8 cents a share.
Declining issues outnumbered advancers more than 2 to 1 on the New York Stock Exchange, where trading was brisk.
The Russell 2000 index, the barometer of smaller company stocks, fell 11.50, or 2.2%, to 507.86.
