"Global slowdown" was a phrase often repeated by traders of the shares of non-U.S. companies bought and sold in the United States on Monday, as the Nasdaq hit a two-year low and high-tech company warnings around the world continued to scare off investors.
"The weakness at the end of last week set the tone for a continued sell-off in Asia. Add to that a sell-off in Europe this morning on Ericsson's warning and a lack of any institutional buying, and we see the global ball rolling to the downside," said James Joyce, head of international trading at Credit Suisse First Boston.
"It does appear to be a global slowdown, not just a U.S. problem," Joyce added.
The Nasdaq Composite index fell below 2,000, to its lowest level since December 1998, after computer networking titan Cisco Systems Inc. , which outsources its manufacturing to Europe and Asia, said late on Friday that it would cut 11 percent of its work force, or up to 5,000 jobs.
The tech-laden index had already plunged Friday, a day after No. 1 computer chip maker Intel Corp. said it would cut 6 percent of its work force.
The Bank of New York's index of leading American Depositary Receipts (ADRs) fell 3.20 percent to 115.25, crushed mostly by a 3.42 percent drop in the BONY index of leading European companies to 123.46.
The Nasdaq Composite, which peaked at more that 5,000 points a year ago, crumbled 128.28 points, or 6.25 percent, to 1,924.50. The Nasdaq is now down more than 60 percent from its March 10, 2000 record high of 5,048.62.
The Dow Jones industrial average plunged 403.85 points, or 3.80 percent, to 10,240, extending Friday's losses and reaching a low unseen since late October 2000. The Standard & Poor's 500 Index was down 34.34 points, or 2.81 percent, at 1,198.73.
Before the Nasdaq opened on Monday, Sweden's telecommunications equipment maker Ericsson , the world's third-largest, issued a profit warning, sparking another round of sell-off in European technology stocks. All day the company's ADR joined the stock market's top 10 loss leaders, falling 25.37 percent to $6-7/32.
"Ericsson got the ball rolling with their profit warning, which basically covered handset sales, as well as infrastructure sales, so consumer spending and corporate spending kind of both come into question." said Joyce.
From French telecoms equipment maker Alcatel , which last week said its handset business was deteriorating, and whose ADR lost 6.1 to $36.45 percent of its value on Monday, to German telecoms carrier, Deutsche Telekom , down 4.37 percent to $23.62, the whole sector whirlpooled.
Britain's blue-chip index closed at the lowest level in two years on Monday, slammed on the tech side, then pounded in finance stocks as investors took fright at the $26.5 billion price tag UK insurer Prudential will pay for American General Corp . Prudential shares tumbled 15 percent to $22.40.
Siemens AG , one of Europe's biggest technology suppliers, listed an ADR on the New York Stock Exchange for the first time on Monday, opening under the ticker "SI" at an initial public offering price of $112.25.
Though Siemens ordinary shares traded down over 4 percent in Europe, its ADR saw little volume and never moved higher than $113.20. By late afternoon Siemens ADR was at $110.90.
"Frankly, I think a lot of the fund managers playing the ADR aren't really that plugged into the status of Siemens in Europe, which is much more focused on the technology side," said Charles Gushee, international equities trader at SG Cowen.
The BONY index of leading Asian firms was down 2.23 percent to 101.19, largely on the U.S. high-tech slump, traders said.
Mainland China's two leading telecommunications firms with ADRs, China Mobile , the No. 1 mobile company, and the nation's No 2 mobile company and only "fully licensed" telecommunications company, China Unicom , both fell after Ericsson warned.
Unable to hold themselves apart from their debt-ridden European counterparts any longer, the Chinese telecoms extended days of losses.
"Until we get more visibility on the macroeconomic themes in Asia, it's getting harder for large global companies to differentiate themselves just because they happen to be domiciled in Asia, Europe, or the U.S.," said Joyce.
China Unicom was off 2.62 percent to $13.01, and China Mobile was off 2.13 percent to $23.02.
Meanwhile in Japan, where the Nikkei Industrial average dropped to a 16-year low in trading over night, Japanese market bellwether electronics and entertainment giant, Sony Corp. , fell 3.81 percent to trade at $67.96.
The BONY index of leading Latin American companies was down 1.16 percent, with Mexico's leading broadcaster, Grupo Televisa off 6.98 percent at $38.09.
"People are selling companies that have high price-earnings ratios, and Televisa fits that description. What's more, traders are saying 'Hey, they met their numbers last quarter and still their P-E is high, so let's sell," said Hugo Rubio, international equities trader at Lazard Freres.
The only bright side Rubio saw in the stocks he trades in Latin America were the Chilean energy companies.
"They don't have much technology, so they're less of a risk," he said.
Still, both oil company Endesa-Chile , off 2.09 percent to $10.80, and its sister company, Enersis was down 0.35 percent to $17.30.