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Bear Market in Tech?
Posted By Barry Ritholtz On August 16, 2004 @ 9:50 am In Finance | Comments Disabled
Very nice article on the near Bear Market in Tech stocks in today’s WSJ. The writer was smart enough to note that the Nasdaq “could claw back.” Hey, its easy to hate ‘em when every body else does — safety in numbers — but it takes some guts to like ‘em when they are down!
Here’s the ubiquitous excerpt:
Buyers on Wall Street have gone into hibernation — and technology stocks are approaching bear-market status.
Tech stocks took repeated beatings last week. John Chambers, chief executive of bellwether Cisco Systems Inc. said corporate executives had become more cautious about the economy. Then, computer and printer maker Hewlett-Packard Co. said current-quarter earnings would miss targets.
By the end of the week, the Nasdaq Composite Index had sunk 1.1%, or 19.67 points, to 1757.22, putting it very close to the threshold of 20% below the latest high that defines a bear market.
“CEOs are more concerned about the economy; they haven’t cut budgets, but they haven’t spent what’s been allocated,” says Steve Milunovich, global technology strategist for Merrill Lynch in New York. “We’re fundamentally in a bear market in tech.”
The weakness in the tech sector suggests investors are concerned about economic strength in the second half of the year and may be re-evaluating what they are willing to pay for stocks.
Though spending by individuals accounts for about two-thirds of the overall economy, many investors fear that consumers are getting tapped out, especially as more of their income gets siphoned into their gas tanks.
The rest of the article is worth reviewing; Very nice data chart also:
click for larger chart
graphic courtesy of WSJ 
Good stuff . . .
Tech Shares Approach Bear-Market Status 
Caution About the Economy, Oil Prices Damp Sentiment;
‘Nasdaq Could Claw Back’
By ERIN SCHULTE
WALL STREET JOURNAL, August 16, 2004; Page C1
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