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John Ryding, Bear Stearns
"Dot.com mania had been overdone"
 real 28k

Wednesday, 12 April, 2000, 20:38 GMT 21:38 UK
Tech stocks tumble further

The Nasdaq index nosedived in late trading on Wednesday to record its second biggest points loss as the technology stocks sell-off continued.

It finished down 286.27, more than 7%, at 3,769.63. It was the first time the technology-heavy index had closed below 4,000 for two months.

The Nasdaq has now lost 25% of its value since hitting a record high of 5,046 a month ago.

This latest fall - the third in succession - also dragged down blue chip stocks. The Dow Jones industrial average, which had been making steady gains, collapsed towards the end of trading.

It finished down 161.95, or 1.48%, at 11,125.13.

The current spell of volatility began last week in the wake of the Microsoft court decision that ruled the company was operating an illegal monopoly.

Profits warning

And it was the same company which was at the heart of Wednesday's woes.

Microsoft shares dipped after a leading investment house cut the software giant's third-quarter revenue outlook.

Another software maker, Compuware, fell 38% after a profits warning.

"This is anxiety in a market which has posted phenomenal gains in the past year and while these drops are rough, they are only really giving back a portion of what the market has paid out in the past year," said John Ryding of Bear Stearns.

The decline dragged down other markets. In London, the FTSE 100 index fell for a third straight session to end down 28.4 points at 6,350.8.

Frankfurt ended the day flat and Paris finished 22.72 points lower at 6,238.70.

But the late collapse has led to fears that European markets could follow suit when they open on Thursday.

And some believe there could be more to come.

Disturbing feel

"Today and yesterday seem very orderly. It looks like people just lessening their positions in technology stocks, moving to cash or other positions outside technology and just lessening their weight," said Barry Hyman of EKN in New York.

"That's a very different feel, and more disturbing, because it's just selling and not forced selling.

"Forced selling usually leads to a bottom. Normal selling to lessen exposure is just a natural process in the market and it could continue for a while."

That scenario is not to everyone's liking. "If it goes lower, well, I don't want to know what's next," commented one trader.

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See also:

05 Apr 00 | Business
Stock markets gloomy
06 Apr 00 | Business
London trading: what went wrong?
17 Mar 00 | Business
Rollercoaster week for stocks
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