FINANCIAL MARKETS : Wild Ride in Techs Leaves Market Mixed
Wall Street stumbled to another mixed finish Tuesday, as a morning selloff in technology shares gave way to an afternoon buying binge.
Meanwhile, the dollar staged a fresh rally on hopes for lower Japanese interest rates.
In the stock market, the Dow industrial average ended with a gain of 14.44 points at 4,608.44 after an early slide. Losers outnumbered winners by 12 to 10 on the New York Stock Exchange in moderate trading.
But the real action was in the Nasdaq market, home to many technology stocks. The Nasdaq composite index plunged as low as 989.84--a drop of more than 18 points from Monday’s close--as investors dumped tech issues early in the day.
The selloff was prompted in part by some analysts’ reports that Taiwanese producers of SRAMs, or static random-access memory chips, were cutting prices sharply. That raised fears that demand for chips is fading and thus that semiconductor companies’ earnings growth may slow.
But the reports were later clarified to show that the price cuts were related to the dependence of Taiwanese memory-chip suppliers on 486-speed personal computers--a product line that is rapidly giving way to faster computers powered by Intel’s Pentium chip.
“The report was broadly over-interpreted as a reason [for investors] to run for the hills,” said Erik Jansen, analyst at brokerage Alex. Brown.
As investors’ fears abated, tech shares began to rally. The Nasdaq composite index ended with a loss of just 4.51 points, at 1,003.64.
Traders said the latest bout of volatility in tech stocks reflects investors’ nervousness about the stocks’ big gains this year, worries about future earnings and the general illiquidity in the market in August, when many market players are vacationing.
Many analysts warn that the stocks are vulnerable to deeper declines. The Nasdaq index still is up 33% year-to-date.
Elsewhere, the dollar advanced strongly, though in thin trading. Analysts credited upbeat data on new home sales nationwide and rumors that the International Monetary Fund is urging Japan to cut interest rates to help its economy.
The dollar rose to 98.05 Japanese yen in New York from 96.69 on Monday and to 1.477 German marks from 1.467.
In other trading, bond yields ended just slightly higher after a midday surge. The 30-year Treasury bond yield closed at 6.71%, up from 6.70% on Monday.
Among Tuesday’s highlights:
* Technology stocks that got whiplashed included chip maker Micron Technology, which ended up 1/4 to 71 7/8 after falling as low as 67 5/8; Motorola, which rose 2 to 72 7/8 after falling to 68 5/8, and IBM, which gained 3/4 to 102 3/8 after hitting 98 5/8.
Also, Microsoft rose 1 13/16 to 91 7/8 after an early dip to 87. The company’s new Windows 95 software program is selling well, though many users are complaining of bugs.
* Bank stocks were mixed after surging Monday in the wake of a flurry of merger announcements, including a deal between Chase Manhattan and Chemical Banking. Chase eased 5/8 to 59 and Chemical slipped 3/4 to 59 3/8.
But First Interstate gained 1 1/8 to 94 1/4, Mellon rose 1 5/8 to 45 1/4 and Banc One added 1/4 to 34 1/8.
* The Big Three auto stocks rose on expectations of healthier August sales. Ford jumped 1 1/8 to 30 1/4, GM surged 1 3/4 to 47 1/4 and Chrysler added 1 to 52 7/8.
In foreign trading, Tokyo’s Nikkei-225 stock index jumped 287.87 points to 18,135.16, even as rumors swirled that the IMF plans to label Japan’s economy as “in its worst shape” in 50 years in an upcoming report.
In Mexico City, the Bolsa index eased 4.22 points to 2,489.29.
