Tech Selloff Shows Market Wanted More Than a Quarter Point

Tuesday’s stock market story is pretty simple. Stocks did little in the morning. Then the Fed cut short-term rates by a quarter point. But the market wanted a half-point rate cut. So investors sold off. Ergo, the Nasdaq Composite, which had rallied 7%, or 178 points, since dropping to 2540.99 at the November 26 close, is now down almost 58 points, or 2.1%, at 2661.13.

Ergo, most tech stocks are now flashing red. Examples:

• Cisco (CSCO), which was up more than a point earlier, is now down 53 cents, or 1.9%, at $28.19.
• Intel (INTC) has reversed course, and is now down 68 cents, or 2.5%, at $27.10.
• Microsoft (MSFT) is off 67 cents, or 1.9%, at $34.09.
• Apple (AAPL), which earlier today hit a new all-time high, is now down $4.75, or 2.5%, at $189.46.
• Dell (DELL) is down 74 cents, or 2.9%, at $24.47.
• Research In Motion (RIMM) is down $4.18, or 4.1%, at $98.20.
• Applied Materials (AMAT) is down 47 cents, or 2.5%, at $18.17.
• Google (GGOG) is down $12.70, or 1.7%, at $706.12.
• Baidu (BIDU) is down $13.31, or 3.4%, at $383.99.
• VMware (VMW) is up (?!) $2.33 or 2.5%, at $95.78.

Comments

[jjbear]

"But the market wanted a half-point rate cut."

The wall street cry-babies are so predictable.

[garlicbulb]

If Cisco is at $28.19, how is it down? My computer says it is up 36 cents at $28.02. Looks like Monday's close was $27.66.

[Techtrader]

Nice statement of the obvious.

[ikkeme]

Wall St wants a 0% interest rate. Not even Bernanke would give them that.

[omooc]

I thought the market has included a 1/4 point rate cut into stock pricing. Where are the pundits who gave us this gem of discounted model? omooc

[ikkeme]

There is no limit to what "the market wants", and "the market" will price as much of it into the stock valuation as the the most "optimistic" sucker will allow it to.

[Just thefacts, justthe facts]

Hey Eric,

It would nice if you didn't get both your facts wrong in a two statement story. The market didn't want or demand a half point cut. The market wanted some comforting comment regarding an economic slowdown vs. inflation. It got an inflation comment.

Second, tech stocks are flashing red because institutions sold those stocks following the wave of selling of financials which had run up in the week previously. What else could they sell that has large profits? Housing stocks? - oh yeah, those were being sold in the first wave with financials.