ANOTHER SWARM of profit warnings and analyst downgrades hit the tech sector today, led by Yahoo!'s high-suspense earnings bomb and management shake-up.
The battering was enough to end the Nasdaq's three-day bounce off the bottom, but traders didn't pull their money out of the market. They went back to buying old-fashioned stocks like drug and food, utilities and even retailers.
The sector rotation stood in contrast to the periodic freefalls of late February, when profit warnings triggered triple-digit losses.
"About a month ago, if a couple of these companies came out with preannouncements, [investors] would take this market apart like a cheap suit. Now, the market's acting pretty well," said Larry Lawler, head of block trading at Dreyfus.
At 12:30 a.m, the Nasdaq Composite Index was off 40 points, or 1.8%, but the Dow Jones Industrial Average was up 43. The S&P 500 was up two..
Trading in Yahoo, the leading Internet media company, was halted by the Nasdaq for nearly a full day yesterday as rumors swirled about an upcoming announcement. After the bell, the company announced that a sharp decline in advertising would cause it to merely break even in the first quarter, missing expectations of a five-cent-a-share profit. Yahoo chairman and chief executive Tim Koogle said he would give up the CEO job as the company searches for an outsider to beef up its management ranks.
Traditional media companies like the New York Times (NYT) and Dow Jones (DJ), co-owner of this Web site, have also slashed their profit projections in recent days as advertisers cut back spending.
Still, analysts said they were surprised at the depth of Yahoo's plight and that the company has some work to do to regain the faith of the Street.
"We believe the rebuilding process will likely be a long one and, in the absence of significant quarterly outperformance, we do not see a catalyst to spur renewed investor confidence in the Yahoo story in the near term," wrote J.P. Morgan H&Q's Paul Noglows in downgrading the stock to Market Performer from Long Term Buy.
Yahoo's shares tanked 20%. Other Internet leaders fell in concert.
The battering was enough to end the Nasdaq's three-day bounce off the bottom, but traders didn't pull their money out of the market. They went back to buying old-fashioned stocks like drug and food, utilities and even retailers.
The sector rotation stood in contrast to the periodic freefalls of late February, when profit warnings triggered triple-digit losses.
"About a month ago, if a couple of these companies came out with preannouncements, [investors] would take this market apart like a cheap suit. Now, the market's acting pretty well," said Larry Lawler, head of block trading at Dreyfus.
At 12:30 a.m, the Nasdaq Composite Index was off 40 points, or 1.8%, but the Dow Jones Industrial Average was up 43. The S&P 500 was up two..
Trading in Yahoo, the leading Internet media company, was halted by the Nasdaq for nearly a full day yesterday as rumors swirled about an upcoming announcement. After the bell, the company announced that a sharp decline in advertising would cause it to merely break even in the first quarter, missing expectations of a five-cent-a-share profit. Yahoo chairman and chief executive Tim Koogle said he would give up the CEO job as the company searches for an outsider to beef up its management ranks.
Traditional media companies like the New York Times (NYT) and Dow Jones (DJ), co-owner of this Web site, have also slashed their profit projections in recent days as advertisers cut back spending.
Still, analysts said they were surprised at the depth of Yahoo's plight and that the company has some work to do to regain the faith of the Street.
"We believe the rebuilding process will likely be a long one and, in the absence of significant quarterly outperformance, we do not see a catalyst to spur renewed investor confidence in the Yahoo story in the near term," wrote J.P. Morgan H&Q's Paul Noglows in downgrading the stock to Market Performer from Long Term Buy.
Yahoo's shares tanked 20%. Other Internet leaders fell in concert.
