SAN FRANCISCO (09/07/2000) - A down day in the semiconductor sector brought the Nasdaq tumbling down Wednesday, disproving predictions of a post-Labor-Day rally. The Nasdaq lost 3 percent, or 129.84, to 4013.34, giving back the bulk of recent gains. Movement in the financial sector, meanwhile, buoyed the Dow, which gained 0.44 percent, or 50.03, to 11310.64.
Signs of tech weakness appeared with a downgrade for Micron Technology Inc. (MU) . That stock fell 11 percent, taking the rest of the semiconductor sector down with it. PMC Sierra lost $15.11, or 6 percent, to $218.51, while Cypress Semiconductor Corp. (CY) lost $3.18, to $43.18. Applied Materials Inc. (AMAT) fell $4.37, or 5 percent, to $80.06.
Preceding Wednesday's domino-like fall was Tuesday's drop by Intel Corp. (INTC) ; that stock continued its slide, dropping $3.43, or 5 percent, to $65.18.
Although the losses in semiconductors were broad and deep, they simply marked another bump in what has been a roller-coaster year for the sector, says Chris Wolfe, an equity strategist for J.P. Morgan's private bank. Wolfe notes that semiconductor stocks have bobbed up and down since March, and he says they will continue to tread water until investors make up their minds. As for the broader tech market, Wolfe says he expects things to remain volatile for roughly another month, until third-quarter figures are revealed.
Large-cap tech stocks were down Wednesday, and the Internet space suffered an even harder fall, giving back recent gains. The software sector also struggled: Novell (NOVL) dropped 3 percent on news that the company, seeking a path to profitability, will cut its staff by 16 percent. Sector-mate Corel (CORL) likewise announced impending layoffs Wednesday, but the news had the opposite effect - Corel's stock spiked 13 percent, or 51 cents, to close at $4.37.
The Dow was helped up Wednesday by J.P. Morgan, whose stock jumped on rumors that it might be the financial sector's next takeover target. J.P. Morgan gained $8.37, or 5 percent, to close at $168.31.