As the Stomach Turns: Nasdaq's Near-Meltdown

SAN FRANCISCO (04/05/2000) - For a day when the Nasdaq Composite Index closed down only 74 points, there sure were a lot of queasy stomachs. But what a brutal day it was, nonetheless. The Nasdaq dropped as low as 3649 during trading Tuesday, a drop of almost 14 percent from its Monday closing level of 4223. That put the Nasdaq at its lowest level since December 15.

But by day's end, tech stocks bounced back enough to push the Nasdaq up to 4148, down 74.79 points or 1.7 percent. For anyone who missed the thrill ride, an approximate experience would be a high-tech roller coaster that sends your heart into your throat while dropping you into a free fall and then setting you safely on solid ground. Only with the Nasdaq, no one was sure when the free fall would end. Several stocks ended the day higher. Telecom company Copper Mountain closed up 14 percent, Web services pioneer Exodus jumped 12 percent, and Yahoo rose 4 percent. Qualcomm, the wireless company that many argue started the Nasdaq's recent bull run, closed up 4 percent.

And though some stocks escaped unscathed, many others saw double-digit declines: Network security company ISS Group was down 19 percent, and business-to-business incubator Internet Capital Group was down 18 percent.

Mega-investor CMGI, online broker E-Trade and wireless software company Phone.com were all down 11 percent. The Nasdaq is off 19 percent from its March 10 high of 5132. At its lowest point Tuesday, the Nasdaq was down 29 percent from that high. Most analysts call it a bear market when a major index like the Nasdaq falls more than 20% from its recent high.

This just might have been one of the shortest bear markets in Nasdaq history.

Welcome to the new stock market, where bear markets happen in warp overdrive.

But despite the market's turmoil, companies that dared to forge ahead with their initial public offerings fared well. Cabot Microelectronics went public at $23.50, dipped as low as $22 and closed the day at $24.89. Others, like b-to-b site Chemconnect and communications company US Unwired, blithely filed for future IPOs. The beat goes on.

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