Tech Stocks Stable After Wild Ride

Boosted by gains in big cap tech stocks like Cisco, Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT), the Nasdaq composite stock index barely ended its seven-session losing streak Thursday, finishing up 7.34 points in the fifth largest volume trading day in its history.

The Dow Jones Industrial average, meanwhile, rose 1.6 percent to 10,487.29 despite earnings warnings from both Lucent (NYSE: LU) and AT&T (NYSE: T), which both fell to new 52-week lows.

The tech stocks struggled to stay in positive territory throughout the day. Many of the tech issues moved up mid-session, only to see their gains evaporate toward the close of trading.

More than 1,000 Nasdaq listings reached new 52-week lows Thursday, compared to 75 new highs.

Thursday's close helped the Nasdaq regain only a fraction of its 42 percent year-to-date fall (23 percent over the last seven trading sessions). Unless it can rally, the Nasdaq is reportedly headed for its worst year since 1974, when it fell 35.1 percent.

Net Stocks Slide

The announcement by Microsoft (Nasdaq: MSFT) that it is buying mid-market business applications supplier Great Plains Software, in a stock deal worth around US$1.1 billion, gave the Nasdaq a boost. Microsoft gained $1.94, or nearly 5 percent, to finish the day at $43.44.

Cisco (Nasdaq: CSCO) rose 6.5 percent to close at $38.89, while Intel (Nasdaq: INTC) improved 3.8 percent to $33.13.

Other high tech stocks did not fare so well. The Goldman Sachs Internet Index fell 5.6 percent and is down a whopping 76 percent for the year. The continued fall was led by Yahoo! (Nasdaq: YHOO) and RealNetworks (Nasdaq: RNWK), whose shares dropped by 9 percent and 44 percent respectively.

Amazon (Nasdaq: AMZN) also continued its plunge, falling 10 percent to $15.19, after one analyst firm came out with a "continued cautious view" on the company's holiday season earnings. Some analysts continue to believe that the Net's largest e-tailer may run out of cash by the end of January.

Looking for Bottom

A number of factors have been blamed for the continuing market turbulence, including a slowing economy, earnings warnings from high profile companies and a shaky political environment.

Analysts also attributed tax-related selloffs on the slumping techs for much of the Nasdaq's latest volatility.

Amid growing speculation that the U.S. Federal Reserve will cut interest rates before its next meeting in January, analysts are asking, has the Nasdaq bottomed out? Jeff deGraaf, chief technical analyst from the Lehman Brothers, told industry press that he does not think so.

"The momentum will start to decelerate," deGraaf said. "New lows are usually followed by new lows at a decreasing rate, and that has not happened yet."

GDP Growth Slows

New data released by the U.S. Commerce Department on Thursday could hasten a Fed rate cut.

The Commerce Department's estimate of gross domestic product (GDP) growth for the period from July through September was lowered from a previous calculation of 2.4 percent annually to 2.2 percent -- another apparent signal that the economy is slowing down and that recession, not inflation, is now the biggest worry for the Fed.

"The deceleration in real GDP in the third quarter primarily reflected downturns in inventory investment and in federal government spending," the Commerce Department said.