Techs Tumble and Gillette Rattles the Big Board; Oil Prices Hit New 10-Year High
WILLOW BAY, CNN ANCHOR: Tonight on</s>MONEYLINE: Wall Street smacked down again. Techs tumble and Gillette rattles the Big Board with a sales warning, pinning the blame on a weak euro.</s>STUART VARNEY, CNN ANCHOR: The market's other big worry: oil prices, hitting a new 10-year high. How much higher will they go? We'll ask the head of the world's second largest oil company.</s>BAY: Corporate America's biggest merger faces a critical threat from thousands of miles away. Is the E.U. ready to say: We object to AOL-Time Warner?</s>VARNEY: And, a special Monday night look at marketing on the football field: one team that's the undisputed champ.</s>ANNOUNCER: This is MONEYLINE. Reporting tonight from Los Angeles, Willow Bay, and from New York, Stuart Varney.</s>BAY: Good evening everyone and welcome to MONEYLINE. I'm Willow Bay.</s>VARNEY: And good evening, I'm Stuart Varney. Our top story tonight: Yes, the September slump continues on Wall Street. Stocks took another ugly beating today, as fears intensify over surging oil prices, the weak euro and corporate profits. Confession season, that's in full swing with Gillette and Rockwell both warning that results will disappoint. The two-session loss in market value now, nearly a half trillion dollars. Let's move to the Dow industrials. Today, they fell 118 points and that's on top of the 160-point loss Friday, closing out at 10808, just about 10 points from its low for the session. As for the Nasdaq, it plunged nearly 3 percent, losing more than 108 points. It closed at 3726, as key stocks like Dell and Worldcom hit 52-week lows. The S&P; 500, down 21, it was at 1444, and that's a loss of nearly 1 1/2 percent on the day. It has been a brutal month for stocks. So far this September, the Dow is down more than 3 1/2 percent, losing ground in all but four trading sessions. The Nasdaq has taken a much bigger tumble, losing more than 11 percent, after stellar gains in the month of August. Let's check in now with Terry Keenan at the New York Stock Exchange with all the day's action -- Terry.</s>TERRY KEENAN, CNN CORRESPONDENT: OK, thank you very much, Stuart. Well, today, talk here turned from the buzz about why the euro is down so much and oil is up so much to even greater worries about why this market behaving so badly. Case in point Microsoft: The Dow component got some potentially good news this morning when Rick Sherland of Goldman Sachs, indicated the company management had no plans to make any pre-announcements ahead of the earnings. But the stock sold off nevertheless, and tonight it's just $3 above a very key support level. Other Dow losers included J.P. Morgan, which has gone straight down since its $30 billion deal with Chase, announced just last week. Eastman Kodak also a loser, as was Johnson & Johnson. Concern there about its exposure to overseas markets. And finally, ExxonMobil, that's the only bright spot, that's why I paused. One of the few stocks up, a new high on that stock today. The market breadth also got a lot worse today. Look at this. And if you think that was ugly, you should have seen the market breadth on the Nasdaq. Volume continued to be rather light, as you can see there on the screen after triple-witching on Friday. Taking a look at where the money was moving today, Nortel giving back its rally from late last week. Micron Technologies, a loser as well. Dan Niles at Lehman Brothers had some encouraging words on this stock this morning but investors sold into that rally, not a good sign. General Electric, one of the stand-out winners on the Big Board, up a dollar. Lucent, though, falling to a new multi-year low. And Chase, look at that, down 2 9/16, now trading at just 12 times earnings. Here are some of the story stocks we're following this evening. Gillette, that is a new low on that stock, warning that the euro will hurt its earnings. Lehman, in a very tough brokerage sector, down $7. Rockwell also down seven. It will miss its fourth quarter, the company warned. And Delta losing more than a dollar, a downgrade there. AOL, however, was up a quarter, the company meeting with analysts this afternoon, this amid reports that the European Union is looking to block its takeover of Time Warner, the parent of this network -- Stuart.</s>VARNEY: And that is Terry Keenan at the New York Stock Exchange. Thanks very much, Terry. Willow.</s>BAY: Stuart, today's Nasdaq plunge is just the latest decline in what has been a terrible September for the index. In fact, this may well end up as the Nasdaq's worst September in a decade. John Metaxas joins us now with a look at the stocks that drove the Nasdaq under, today -- John.</s>JOHN METAXAS, CNN CORRESPONDENT: That's right, Willow, down almost 12 percent since Labor Day. Every sector was lower here today, led by the biotechs down 5 percent. Decliners swamped advancers by a three-to-one. The focus was on earnings warnings and a couple of smaller companies doing that today. You can see the damage that Wall Street inflicts. ICG Communications down 57 percent, not only issuing an earnings warning, the company needs more funding, they're talking with financial institutions right now. Allaire says they'll have a third-quarter loss when Wall Street expected a gain, a 40 percent haircut today. Now I want to show you two gainers, but these were the exception, not the rule today. As we said, every sector lower. Sun Microsystems got permission from the government to export high-encryption products, and Network Appliance reaching a new all-time high today, this company's products chosen to power genomic research. They make file storage servers. Finally, Cisco Systems today down 4 percent. This was typical of many of the blue chips of the Nasdaq here. It held $60 a share, but in the last week Cisco has broken through its 200-day moving average. The purple line is Cisco, the yellow line the 200-day moving average. You have to go back three years except for a couple minor blips to find the last time when Cisco broke down below that 200-day moving average -- a significant change in the market for Cisco Systems, and many say for the Nasdaq itself. Technicians think this Nasdaq right now is oversold. That means it's prime for buyers to step in. But the buyers are not stepping in, and some of the technicians say we may see 3500, 200 points below where we are now, before things turn around here. John Metaxas reporting from the Nasdaq marketsite.</s>BAY: And Later on MONEYLINE, the stock-picking stars of the financial world. We'll begin a special two-week look at the fund managers who have delivered standout returns in a rough market year. Tonight, we'll talk with Mark Herskovitz, whose Dreyfus Premier technology growth fund is up double digits in 2000.</s>VARNEY: Clearly, one factor making for a rough year on Wall Street is the soaring price of oil. It is up more than 40 percent in 2000. And today, oil continued its remarkable rise, shooting above $37 a barrel before settling at $36.88. That is a new 10-year high. Allan Chernoff now joins us with a look at the rising price of oil, the dismal performance of the euro, and what happens to America's corporate profits. What do you have there?</s>ALLAN CHERNOFF, CNN CORRESPONDENT: Well, Stuart, one way to sum it up, the energy and currency markets today teamed up to wreak havoc on the stock market.</s>LAURIE CAMERON, J.P. MORGAN: Day after day, we get negative earnings preannouncements, and it's really rocking the confidence of a lot of investors.</s>CHERNOFF: The latest victim is Gillette, saying the weak euro will translate into fewer dollars reaching the bottom line, though an increase in pricing should rescue the quarter. Auto parts maker Dana Corporation also laying some blame on the euro, while chemicals firm Vulcan Materials and Corn Products International say their troubles result from high oil prices. The expensive petroleum has been depressing share prices for months, but now with oil at its new height, the profit outlook is turning bleak in some industries. Chemical companies are watching raw material prices sore, and airlines, earnings estimates are falling for every company in the business.</s>JOHN HILL, ABN AMRO: Airlines or railroads that haven't hedged forward, their purchases will have a hard time passing on these increases to their customers, and, therefore, there should be a negative impact to earnings.</s>CHERNOFF: Exposure to the sinking euro is widespread as well. The S&P; 500 companies earn about one-quarter of their profits overseas, the bulk in Europe.</s>PETER CANELO. MORGAN STANLEY DEAN WITTER: It's a big, big part of their profit outlook, and if Europe is in trouble these companies will be in trouble.</s>CHERNOFF: Among the S&P; 500 companies with the biggest exposure: Tupperware, Crown Cork & Seal, Wrigley, BestFoods, advertiser Omnicon Group and International Flavors and Fragrances. All traded lower today.</s>CHERNOFF: Do not expect a letup on these stock market problems any time soon. The euro can't seem to get out of its own way, and as far as oil, there's not much hope in near term. Refineries are tight, and there's talk in the market now of oil hitting $40 a barrel. And, Stuart, John Hill is saying $50 a barrel is a possibility.</s>VARNEY: Just wait until there's cold snap in the Northeast, where the oil market is located.</s>CHERNOFF: That might do it.</s>VARNEY: All right, Allan Chernoff, thanks very much -- Willow.</s>BAY: Stuart, still to come on MONEYLINE, with oil prices at those new 10-year highs, is there any relief in sight? Well, we're going to put that question to the man at the helm of the world's second-biggest oil and gas company, the chairman of Royal Dutch Shell. Plus, a look at one fund manager who has racked up double-digit returns for his investors, while the rest of the market has gone nowhere. And Cadbury-Schweppes juices up its arsenal of soft drinks, shelling out big bucks for Snapple and more.</s>ANNOUNCER: From CNN's Los Angeles and New York headquarters, this is THE MONEYLINE NEWS HOUR.