Blue Chips’ Record Run Comes to Halt : Markets: Technology stock selloff pulls Dow below 4,800. Nasdaq index slumps 1.5%. The dollar roars past 104 yen.
The high-flying U.S. stock market struggled through a volatile session Friday to end mostly lower, with many technology shares in a deep selloff.
But the tech sector’s woes had only a minor impact on Wall Street overall, despite concerns that a sharp reversal in tech stocks could sink the bull market.
The Dow Jones industrial average eased just 4.23 points to 4,797.57, leaving the blue-chip index up 96.85 points for the week and just below record highs.
Steep declines in such tech stocks as Apple Computer and Oracle Corp.--both of which issued disappointing financial reports late Thursday--pulled the Nasdaq composite index down 15.86 points, or 1.5%, to 1,051.10 on Friday.
After 10 months of tremendous gains, tech stocks are particularly vulnerable to any bad news, analysts noted. High expectations for the companies’ sales and earnings are now being viewed suspiciously, and that could lead to further profit-taking, many experts say.
“Momentum selling is coming into play,” warned Arnie Owen, a managing director at research firm SoundView Financial.
Yet analysts noted that the broad market may actually benefit to some degree if money comes out of tech stocks and flows immediately into other shares.
Indeed, on Friday heavy buying of some financial, telephone, drug, food and consumer-products stocks offset tech stocks’ decline, leaving such broad indexes as the Standard & Poor’s 500 down only modestly. The S&P; dipped 0.26 point to 583.35.
Trading action was skewed Friday by the quarterly expiration of key stock index options, index futures and individual stock options. Volume swelled as investors closed out trades related to options and futures. New York Stock Exchange volume soared to 466 million shares.
Although the market held up reasonably well against the decline in tech stocks, NYSE losers still narrowly outnumbered winners, and losers had a substantial 21-14 edge over winners in the Nasdaq market, home of many tech issues.
Stocks may have been supported by the bond market’s refusal to sell off, despite new reports pointing to unexpected economic strength, and despite another rise in a closely watched commodity-price index to a five-year high. The 30-year Treasury bond yield closed at 6.48%, up slightly from Thursday’s 19-month low of 6.46%.
Meanwhile, the dollar’s rally revived. It soared above 104 Japanese yen for the first time in 15 months after senior officials from Japan, Germany and the United States all separately declared they want the rally to continue.
In New York the dollar closed at 104.07 yen, up from 102.50 on Thursday, and at 1.489 German marks, up from 1.487.
Among Friday’s highlights:
* Oracle led tech shares lower, plunging 7 1/4 to 37 5/8. Analysts said the software company’s earnings for the quarter ended Aug. 31 were largely on target but that a slowdown in sales growth raised questions about future earnings gains.
But Jeffrey Henley, Oracle’s chief financial officer, described the quarter’s relative weakness as “abnormal. . . . I would encourage [investors] not to extrapolate [the] results for the rest of the year.”
Apple sank 4 1/8 to 35 7/8 after its warning of weak earnings ahead, mainly because parts shortages are limiting computer production.
Other slumping tech shares included IBM, down 1 1/8 to 92 1/4; Sun Microsystems, off 1 7/8 to 55 5/8; National Semiconductor, down 1 3/8 to 29 3/4; Intel, off 1 9/16 to 62 1/8; Broderbund, off 2 3/8 to 72, and Storage Technology, down 1 5/8 to 25.
* On the plus side, many financial stocks gained as investors bet that interest rates will remain low. Federal National Mortgage jumped 3 1/4 to 104, SunTrust Banks gained 1 5/8 to 67 1/2, Chubb added 1 1/8 to 95 1/8 and Franklin Resources surged 1 3/8 to 56 1/2.
* Brand-name consumer stocks adding to recent gains included Philip Morris, up 1 1/8 to 77 1/8; Clorox, up 1/2 to 72 1/4; RJR Nabisco, up 1 1/8 to 29 1/2; Anheuser-Busch, up 3/4 to 61; and Warner-Lambert, up 1 5/8 to 94.
