Stocks were battered today as investors headed for the exits amid fear and speculation that the Federal Reserve may raise interest rates to slow the economy. Technology stocks were hit the worst.
"This is not panic or crash," said Doug Myers, vice president of equity trading at Interstate/Johnson Lane, "but it's an ugly market."
The tech-laden Nasdaq lost 48.65 points to close at 1820.31, a 2.60 percent decline. Despite the big pullback, today's session did not rank among the Nasdaq's 10 biggest declines in terms of percentage.
The Dow, meantime, closed down 146.98 points at 8917.64, a 1.62 percent drop.
Interest rates have been on hold for more than a year, but speculation intensified after The Wall Street Journal reported today that the Fed, at the 31 March meeting of the policy-making Federal Open Market Committee, agreed that a rate increase is more likely than a cut.
On the Nasdaq, Intel was the most active issue, falling 2.06 to US$80 as the rout of technology stocks took hold. Microsoft was off 1.81 at $90.31. Dell fell 2 to 74.31, and Cisco lost 1.50 to $70.44.
Internet stocks, flying high of late, were grounded on the interest rate concerns. Yahoo was down 2.62 to $112.12, Lycos lost 4.31 to $49.19, Amazon.com lost 2.12 to $82.75, and Excite sank 3.93 to $57.81.
K-Tel International bucked the day's trend, gaining 8 points to $34.75 after announcing a worldwide marketing pact related to its new online music service.
"The techs lead this market and tend to be far more volatile," said Scott Bleier, Prime Charter's chief investment strategist, explaining why the Nasdaq was hit harder than the other indices.
On the New York Stock Exchange, computer-makers lost ground despite word that PC revenue growth was respectable in the first quarter. Compaq lost 1.12 to $27.94, Hewlett-Packard fell 1.37 to $73.25, and IBM declined 2.06 to $115.31.
"Fed Chairman [Alan] Greenspan expertly used his jawbone tool to do what he wanted to to raise market rates without affecting change in policy," said Phil Orlando, chief investment officer at Value Line's Asset Management division. "The market did exactly what Greenspan wanted it to do."
Some market watchers believed that stocks were ripe for a correction.
"The reason the market took such a nosedive on the news was because we started from a position of being overvalued," said Hugh Johnson, chief investment officer at First Albany. "It is doing something which they [the Fed] think is healthy -- that is, they are pulling the market back from the edge of overvaluation and speculation."
Markets elsewhere were spooked and trampled as well. The Toronto Stock Exchange's closely watched TSE 300 Composite index slipped 138.47 points or 1.80 percent, to 7564.77, after falling more than 2 percent in midday trading.
"It's falling as far as I can see solely because of the US, and chances are that it's hard to shake that weakness today," said Arve Bendiksrud, vice president of fixed-income research at Canada's TD Securities.
Reuters contributed to this report
