A wave of profit-taking swept through Wall Street Monday, with sellers zeroing in on many of the market's leading issues, particularly technology and Internet shares.
The Dow Jones industrial average plummeted 214.47 points, or 2.3 percent, to 9,118.61. In percentage terms, it was the worst shellacking for the index since Oct. 1, when it caved 2.7 percent."Stocks are not at ideal entry points but equity investors cannot afford to be in cash either," said Paul Rabbitt, president of Rabbitt Analytics. "Dow 10,000 by Jan. 1 is probable."
Few market watchers were deterred by the day's tone, however, coming as it did on the heels of the Oct. 8 market lows.
"Today's action in technology was some profit-taking," said Arnie Owen, managing director of equities at Cruttenden Roth. "The [fundamental] underpinnings are still there and I'm not done being bullish."
Among Internet shares, search engine and service provider issues were hit by multiple-point losses. So-called electronic commerce shares absorbed most of the double-digit percentage setbacks after a rapid run-up in recent days on optimism of strong holiday sales results.
Among e-commerce shares, Onsale surrendered 36 1/8, or 37 percent, to 61 1/2; Cybershop International 9 1/8, or 33 percent, to 18 1/2; Books A Million 9 7/16, or 24 percent, to 29 1/2; Creative Computers 18 1/2, or 33 percent, to 37 7/8; Open Market 3 1/2, or 17 percent, to 17 1/4; Egghead.com 6 1/8, or 19 percent, to 25 1/2; Cyberian Outpost 7 5/8, or 23 percent, to 25 1/2; Beyond.com 7 5/16, or 25 percent, to 21 3/4; and Digital River 7 1/4, or 24 percent, to 22 7/8.
Only a few cyber stocks emerged victorious. Electronic grocer Peapod was one, edging up 1/8 to 8 5/8.
Owen isn't concerned. "We're just seeing the Internets start to take a breather," he said. "Everybody keeps talking about their valuations, but you're talking about the future, not the past. Internet commerce is growing and it's probably a heck of a lot bigger now than anybody thought it would be coming into Decembr 1998."
Retail issues, though lower, outperformed on hopes for perky holiday spending.
"Retail sales over the weekend were on plan, with Friday being the stronger day than Saturday," said Dana Telsey, retail analyst at Bear Stearns. "Most of the sales will occur in the three to four days leading up to Christmas. Last year, holiday sales were up around 4.8 percent. I think this season will be a little less than that."
Telsey noted that the unseasonably mild weather in many areas "leads to more markdowns, especially on the clothing side. Warmer weather doesn't help."
In the retail sector, Dayton Hudson added 5/8 to 44 7/8, American Eagle Outfitters 1 11/16 to 59 3/4, and Neiman Marcus 13/16 to 26 11/16.
Energy issues fell lower amid negative analyst comments regarding the outlook for oil prices. Meanwhile, crude oil skidded 86 cents a barrel to $11.00.
In the oil & gas field services segment, Schlumberger lost 3 1/4 to 44 3/4 and Halliburton sagged 1 13/16 to 29 5/16.
Among benchmark computer companies, International Business Machines gave back 4 7/8 to 165 1/8, Microsoft 6 1/16 to 122, Intel 2 3/8 to 107 5/8, Cisco Systems 4 5/8 to 75 3/8, Sun Microsystems 6 5/16 to 74 1/16, EMC 2 1/2 to 72 1/2, and WorldCom 3 7/16 to 59.
In Monday's market indicators:
- The Standard & Poor's 500 Index fell 2.4 percent.
- New York Stock Exchange losers hammered winners by 2 to 1. Seventy-one stocks notched 52-week highs, while 45 issues sank to 52-week lows.
- On the Big Board floor, volume came to 693 million shares.
- The Nasdaq Composite declined 3.3 percent. Declining issues beat gainers by 12 to 7 in the Nasdaq Stock Market, with 146 new highs and 68 new lows. Volume totaled 1.10 billion shares.
- The Russell 2000 Index of small-company stocks sank 1.1 percent.
- The 30-year Treasury rose 1 10/32, to yield 5.080 percent.
Among the companies in the news:
- Bankers Trust (BT) advanced 1 7/16 to 87 after agreeing to combine with Germany's Deutsche Bank in a $10.1 billion deal, or $93 a share. The deal will create the world's biggest banking concern.
- Arterial Vascular Engineering (AVEI) leaped 16 1/2 to 48 7/8. Medical instruments manufacturer Medtronic (MDT) will buy the medical products maker for $3.7 billion in stock. Medtronic stock dipped 1/8 to 69 7/8.
- Mobil (MOB) and Exxon (XON) acknowledged that they're deep in merger talks. The deal might be worth $80 billion. Stock of the former tacked on 5/8 to 86 5/8, while shares of the latter picked up 11/16 to 75 1/16.
- Cendant (CD) advanced 1 1/8 to 19 1/8 after Goldman Sachs added the stock to its "recommended list." The broker had previously rated the shares as a "market performer." Additionally, Cendant was favorably mentioned on the Wall Street Week television program.
- Millennium Chemicals (MCH) lost 1 3/8 to 23 7/8 after the titanium oxide producr warned it will likely break even in its fourth quarter. Most analysts had forecast earnings of 23 cents a share in the period, according to First Call.
- Sharper Image (SHRP) screamed 13 5/8 higher, or 180 percent, to 21 3/16. The direct marketer said sales at stores open at least a year jumped 37 percent from the year-ago level.
- CKE Restaurants (CKR) ascended 3 to 24 7/16 after Merrill Lynch upped its view to "near-term accumulate" from "near-term neutral."