It was a black Friday on Wall Street yesterday, with stocks battered by bad news from computer chip giant Intel and a monthly jobs report that dampened hopes for aggressive Federal Reserve interest-rate cuts.
The Dow Jones Industrial Index plummeted more than 250 points at one point and the technology-heavy Nasdaq Composite - a year on from its record highs - fell by more than 100 points to hit a low not seen since December 1998.
The heavy sell-off began at the opening bell after Intel, the world's number one chipmaker, announced that first-quarter sales would miss already reduced forecasts because of dwindling demand for personal computers and networking gear.
Intel said it would cut 5,000 jobs through attrition over nine months, but this was not expected to affect its operation at Leixlip, Co Kildare, where it employs 3,200 people with an additional 1,200 on long-term contracts.
After announcing that sales would drop 25 per cent from the fourth quarter's $8.7 billion (€9.33 billion), more than the 15 per cent decline predicted in January, Intel shares quickly fell by 13 per cent in heavy selling, dragging them down 62 per cent since reaching a record in August.
"The consequences of an economic slowdown have been pervasive, continuing to erode PC demand and now affecting the communications, networking and server business," Intel's chief financial officer, Mr Andy Bryant, said in a conference call.
"This is pretty ominous. This suggests the slowdown in the economy is probably a little deeper than we thought," said Mr Eugene Profit, of Profit Investment Management who forecast sales of computer-related products may not recover until the first quarter of next year.
A chorus of technology companies have warned that the slower US economy will dent their results and shares in Oracle, Sun Microsystems, Microsoft, International Business Machines, Cisco and other computer-related stocks all fell yesterday.
Cisco Systems, the biggest maker of computer-networking equipment, was reported to be planning to cut 5 per cent of its workforce following a drop in sales to telephone companies and other customers, though it later denied any immediate job cuts were planned.
Cisco stock fell as much as 11 per cent after it said sales may fall 5 per cent this quarter from the last, the first such decline in 11 years.
The mood on Wall Street darkened after data showed payrolls grew by 135,000 in February, twice the expected rise, leaving unemployment steady at 4.2 per cent.
Employment declines in manufacturing were widespread but in the service sector 95,000 jobs were added during February.
Average hourly earnings rose 0.5 per cent, fuelling concern over wage-led inflation.
This lowered the odds for a 75basis-point cut at the Fed's next meeting on March 20th.
Among the technology stocks hammered by the sell-off yesterday was Yahoo.
The once high-flying Internet media company issued an earnings warning on Wednesday for the first quarter of 2001 while announcing that Mr Tim Koogle (49) would step aside as chief executive officer.
