Fears that corporate earnings may be hurt by continued Federal Reserve rate hikes sent the market into a tailspin this session that ended Aug. 2.
A government report showing a larger-than-expected gain in gross domestic product (GDP) numbers heightened concern that the Fed will push rates higher when it meets again at the end of August. Technology stocks were especially hard hit, with the Nasdaq Composite falling three days in a row near the end of our session.
“The brief that a stronger economy could overcome slower earnings growth was quickly put to bed. This is the reaction the market should have with the GDP number at 5.2 percent,´ said Barry Hyman, market strategist for Ehrenkrantz, King, Nussbaum Inc. “This clearly puts the Fed on the aggressive track again.” The Dow Jones Industrial Average lost 8.55 points, or .08 percent, and closed at 10687.53.
In contrast, the Boulder County Business Stock Index edged forward, gaining 14.54 points, or 0.34 percent, and ending at 4256.48. Declining issues, however, outpaced advancing issues 47 to 20.
Level 3 Communications was still on the outs this session despite reporting that its second-quarter loss was not as wide as expected. Net loss was $281 million, or 77 cents per share, compared to the expected loss of $1.03 per share from analysts polled by First Call/Thomson Financial. Revenue almost doubled for the quarter, to $234 million, from $106 million in the same quarter a year ago. The company also raised its revenue projections 10 percent for 2000, up to $825 million. Level 3 lost 13 points, or 16.1 percent, and closed at $67.75. Level 3 was our top dollar loser.
Concepts Direct also struggled after reporting a second-quarter loss, of $1.85 million, or 37 cents per share, a larger loss than last year’s $736,000, or 15 cents per share. Concepts Direct said that weakness in its catalog division was the reason for the wider-than-expected loss. The company ended the session at $4.34, a drop of 3.84 points, or 46.95 percent. Concepts Direct was our top percentage loser.
Sun Microsystems soared after announcing income for its fiscal fourth quarter that eclipsed analysts’ expectations. Sun posted net income of $659.5 million, or 39 cents per share, compared to $395.3 million, or 24 cents per share earned in the year-ago quarter. Analysts surveyed by First Call/Thomson Financial expected Sun to post earnings of 33 cents per share. The company cited strong server sales. Sun jumped 7.31 points, or 7.78 percent, and closed at $101.25.
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