Dow Gains 3.10; Nasdaq Dives 97.50; Dell Issues Profit Warning
WILLOW BAY, CNN ANCHOR: Tonight, the Nasdaq tumbled. What will it do tomorrow now that Dell Computer has set off a late-day profit alarm? Coca-Cola, more than a century old, announcing the most dramatic shake-up in its history. So why did Wall Street seem less than impressed? Primetime viewing in the Chicago trading pits, with all eyes and ears on a congressional lovefest -- Alan Greenspan's renomination hearings. And the other Bush with a bold promise about taxes: Does George W. have a plan that will bolster the economy. Our special series continues.</s>ANNOUNCER: This is the MONEYLINE NEWS HOUR. Reporting tonight from New York, Willow Bay.</s>BAY: Good evening. Stuart is on vacation. Direct from Austin to Wall Street, an after-the-bell profit warning from Dell Computer. Just two hours ago, America's biggest PC seller warned that revenue and earnings would fall short of expectations for the second time in a year. The culprits: a shortage of parts and a sales slowdown post Y2K. Dell's stock is off four in heavy after-hours trading. We'll have more on this developing story later on MONEYLINE. Dell was also a loser during regular trading today and had plenty of company. The Nasdaq ended down nearly 100 points, at its session low, causing investors to fear that yesterday's rally was merely temporary. Charles Molineaux joins us now with more -- Charles.</s>CHARLES MOLINEAUX, CNN CORRESPONDENT: That's right, Willow. That noise from Dell was the other shoe dropping. But it started with Qualcomm's earnings after the close last night. Worries about earnings and interest rates weigh down on technology stock, keeping the Nasdaq composite in negative territory from shortly after the open all day today. We ended up falling by 97 points, closing out the day at 4,069. Volume was heavy -- 1.7 billion shares. It was the telecommunications stocks that led the market down, after Qualcomm reported earnings that beat the official projections but missed the whisper number and including cautions about demand going forward. That spilled over onto computer and industrial stocks, which both fell off, rattling chip companies, like Intel and chip equipment makers, like Applied Materials and Novellus. As a group, chip stocks fell 4 percent. Telecommunication chips have played a major role in chips sales growth, so not that news from Qualcomm was not what chipmakers wanted to hear. Internet stocks slid by 2 percent. Yahoo! fell. Even bold movers or business-to-business plays like Internet Capital Group fell off on the day today. EBay kept climbing though, after reporting better-than-expected earnings and got some dazzling analysts' comments. Financial and banking stocks actually split the day today, after Federal Reserve Chairman Alan Greenspan said nothing threatening about interest rates. Strategists say we are seeing more of the same. Investors are buying stocks up, expecting good earnings, then selling off if profits miss the best expectations or selling if they get those good earnings, unless the forward-looking picture stays bullish -- Willow.</s>BAY: Charles, expect Dell will drag the market down tomorrow?</s>MOLINEAUX: Absolutely, although Dell's been an interesting case, because there has been expectation of some sort of an earnings warning from the company for months. But of course Dell's expectations have historically been extremely high, so there will be some punishment meted out tomorrow, yes.</s>BAY: Charles Molineaux, at the Nasdaq, thank you. The Dow continued a two-session winning streak with a colossal gain of, well, just over three points. But considering the steep sell-off on the Nasdaq, fans of the blue chips can't complain about their modest gain. Fred Katayama reports.</s>FRED KATAYAMA, CNN CORRESPONDENT (voice-over): Call it Wall Street Unplugged -- amid a steep slide in the technology sector, traders tuned into blue chip stocks instead. Tech stocks suffered on word of a bearish outlook for shipments from wireless wunderkind Qualcomm. That hurt Bib Board tech stocks, including H-P, IBM, Intel and Microsoft. But a banner profit report from 3M helped support the Dow. By the closing bell, the industrials finished with a 3-point gain at 11032. Not so for the Nasdaq. A selling cyclone ripped 97 points off the composite. It closed at 4069. Fears that Federal Reserve Chairman Alan Greenspan might roil the markets at his reconfirmation hearing proved unfounded. But even his benign words couldn't stop the drop.</s>RAM KOLLURI, GLOBALVALUE INVESTORS: We will see, unfortunately, gut-wrenching volatility in the sector. If you are a trader, take profits; if you're a long-term investor, hold on, and buy on dips.</s>KATAYAMA: But buying on dips can be difficult in a climate of confusion. Despite confidence in the economy, some analysts question the stamina of the stock market after last year's sprint.</s>RICHARD MCCABE, MERRILL LYNCH: Advances like we had in late 1999 sort of peak out in a "V" fashion, straight up, and then straight down, but sometimes, in fact more than not, advancers top out by a dip, a rally, a dip, a rally. They sort of roll over a month or two time span. So I'm thinking that may be the case here in January.</s>KATAYAMA: Even if the wave motion on Wall Street settles in the short-term, plotting a new course remains a challenge. According to Merrill's McCabe, the cycle of selling should end with a market correction in the spring -- Willow.</s>BAY: Thanks, Fred. Fred Katayama reporting. Chairman Greenspan may have delivered "benign words" to investors, but he sent a stern message to politicians about the surplus: Use it to pay off the debt before cutting taxes. That was the frequent refrain today at Greenspan's renomination hearings before the Senate Banking Committee. The Fed chief also described his role if, as expected, he is granted a fourth term.</s>ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: Our challenge in monetary policy is to foster as best we can the financial conditions that will allow this economic expansion and technological revolution to continue as long and as vigorously as possible.</s>BAY: Greenspan's testimony comes one week before Fed policy- makers are set to decide on interest rates. Five-hundred miles away from Washington today, a corporate bombshell from Coca-Cola. The troubled beverage giant, based in Atlanta, said it would slash more than a fifth of its work force with deep cuts in its home city. It's the biggest overhaul in Coke's history. The company out to decentralize operations, emphasizing local control and more targeted marketing.</s>UNIDENTIFIED MALE: The wireless industry continues to grow. CDMA continues to grow. Within, that, we have some new chips that are now being designed into phones that will be becoming available for the remainder of the year. And so we picked up new customers for the chips. And so we see a question in the second quarter, because of...</s>BAY: Today's bold move did not help the shares close higher. Coke's stock, the second worst Dow performer of 1999, fell nearly $3. Turning now to the day's other top stories outside the world of business. That long-awaited meeting between Elian Gonzalez and his grandmothers finally taking place in Miami. The women are asking Congress not to pass legislation making Elian a U.S. citizen. Massachusetts police searching for a 5-year-old girl, lost yesterday in an icy river, when she went to the aid of her brother during that powerful winter storm that hit the East Coast. While digging out continued, forecasters warned more is on the way. And Republican White House hopeful Orrin Hatch, as expected, quitting campaign 2000, after his last-place finish in Iowa. Hatch endorsed GOP front-runner George W. Bush. We'll focus on the Bush economic platform and his plans for your money later in this half hour. And we should apologize, that was of course an incorrect soundbite we just played for you. That was, in fact, the CEO of Qualcomm. Time now for a quick check on what some of MONEYLINE's other reporters are working in for tonight's broadcast. We begin with Greg Clarkin -- Greg.</s>GREG CLARKIN, CNN CORRESPONDENT: Well, Willow, Coca-Cola shocks Wall Street and its employees, with the biggest shakeup in the company's 114-year history. But is the restructuring deep enough? I'll tell you what Wall Street thinks.</s>YOUNG: And I'm Steve Young. I'll tell you about a research firm whose forecast for business-to-business e-commerce just mushroomed, and a critic who says the number came from the Tooth Fairy -- Willow.</s>BAY: All right, thank you, Steve. And coming right up on</s>MONEYLINE: As you surf the Web, someone is watching your every move. We'll tell you about the company that's making notes and taking names, and you don't even know about it.