TECHNOLOGY AND MARKETS : Stocks Finish Mixed Amid Budget News
U.S. stocks were mixed as profit warnings from Adobe Systems cast a cloud over an end-of-week uptick in battered technology stocks and pessimism continued about the federal budget impasse.
But news that federal workers may soon be back on the job helped the market at the end of the day.
“If they come up with a solution to the budget and remove that uncertainty, stocks will break out to new highs rather quickly,” said Arthur Micheletti, investment strategist at Bailard, Biehl & Kaiser.
Adobe Systems shares fell 28%--down 16 1/4 to 42 1/4--amid investor concern that the acquisition of Frame Technology will cut into earnings for at least two quarters.
Adobe, which writes computer programs such as PageMaker and PhotoShop for desktop publishers, reported fourth-quarter profit from operations Friday that was far lower than analysts expected. The Mountain View, Calif.-based company blamed the results on unforeseen costs related to the Frame acquisition.
Investors spent most of the day concerned that White House and congressional negotiators would be unable to resolve the budget impasse soon, driving the Dow Jones industrial average down as much as 40.1 points. But, whipsawed by events in Washington, the average later rose 7.59 points to 5,181.43 after the House voted to reopen government offices.
In the broader market, declining issues barely led advancers, 1,145 to 1,138, on heavy volume of 433 million shares on the New York Stock Exchange.
Despite the Adobe news, the technology-laden Nasdaq composite index ended with a gain of 3.65 points at 1,033.47, after having lost more than 20 points earlier in the week. Soundview Financial reiterated its “buy” rating on International Business Machines, and Salomon Bros. raised its rating and second-quarter earnings estimates on Digital Equipment. IBM rose 1 3/4 to 88 5/8; Digital Equipment rallied 2 1/4 to 58.
Among the market highlights:
* Banks stocks fell as interest rates rose, with the budget talks weighing heavily on the bond market, where the yield on the 30-year Treasury bond stayed above 6%.
Dow industrials component J.P. Morgan lost 1 3/8 to 77 5/8, and Bank of New York lost 1 3/4 to 45 7/8. Citicorp finished unchanged at 65 3/8 after spending most of the NYSE session in negative territory.
* Oil and gold stocks continued a strong week as investors sought hedges against possible market weakness, Pirrone & Erlanger said.
Exxon, another Dow component, added 2 to 83 3/8, and Texaco rose 1 1/2 to 80 3/4. Among gold stocks, Home Stake Mining was up 1 at 17 1/2, and Newmont Mining rose 1 3/8 to 49 7/8.
* Sears Roebuck added to Thursday’s gains on positive December sales data after Standard & Poor’s said it might upgrade its investment rating on some of the retailer’s bonds and preferred stock. Sears stock rose 1 1/2 to 42.
Gold prices, which have risen sharply since the start of the year as investors poured funds back into the market, stalled just short of the key $400-an-ounce level Friday. At New York Mercantile Exchange’s Comex division, February gold closed $1.10 firmer at $396.50 an ounce after earlier reaching a high of $399.20.
