Techs Falter Again; Dollar Recoups Loss
Technology shares continued to stumble Monday, pulling down the broad market, amid more profit taking on January’s gains and more disappointing earnings news from the computer networking sector.
Bonds edged lower ahead of the Treasury’s quarterly auctions beginning today to fund government operations. The dollar recovered after falling following a Saturday meeting of global economic officials that ended with a veiled threat to halt its rally.
The Dow Jones industrial average fell 49.26 points to 6,806.54, having surrendered an early 20-point gain that briefly put the blue-chip barometer within 10 points of a record.
Broader measures also fell, with the steepest drop coming in the technology-laden Nasdaq market, which fell 22.37 points to 1,335.34. Investors also moved to lock in some profits in other recent leaders, such as oil companies, which have retreated with crude prices.
“You’re seeing a lot of stocks get beat up today, stocks that had been the winners of the last 12 months,” said Don Hays, director of investment strategy at Wheat First Butcher Singer in Richmond, Va. “People are anxious to take some of that money they’ve made and put it on the sidelines.”
The dollar--which on Friday hit a four-year high against the Japanese yen and a 2 1/2-year high against the German mark--tumbled in early European trading after leaders at a weekend meeting of the Group of 7 industrialized nations indicated the U.S. currency’s recent surge has gone far enough.
Bonds slipped early in the session, but recovered as the dollar bounced back, with the yield on the 30-year Treasury bond rising slightly to 6.70% from Friday’s 6.69%. A weaker dollar would make U.S. securities such as bonds less attractive to foreign investors who convert their returns to other currencies.
The dollar fell as low as 120.50 yen, before rising to settle in New York at 122.78 yen, up from 122.60 yen Friday.
On the New York Stock Exchange, declining issues outnumbered advancers by an 8-7 margin. The Standard & Poor’s 500-stock list fell 4.13 points to 785.43, and the NYSE composite index fell 1.45 points to 412.35. Both measures, dominated by larger companies, had closed at record highs on Friday.
Technology stocks were dealt a sharp blow after computer networking giant 3Com, the second largest U.S. maker of networking equipment, warned that its results for the latest quarter would fall short of analysts’ estimates. This triggered a free fall that spread throughout the sector.
The sell-off extended a recent slide for major technology companies, a sector that had led the way as the market marched higher but sharply reversed course in the last few weeks as concern about their ever-increasing valuations mounted.
Among Monday’s highlights:
* 3Com tumbled 13 1/2 to 37 1/4 as the second-most-active Nasdaq issue after networking rival Cisco Systems, which plunged 5 1/8 to 58. Cascade Communications, another networking equipment maker that recently reported disappointing earnings, fell 1 13/16 to 35. Intel fell 4 to 152 3/8 and Hewlett-Packard lost 2 to 49 7/8.
IBM continued to stagger in the aftermath of its fourth-quarter earnings report, dropping 6 to 142 3/4, the equivalent of about 18 Dow points.
* Telecom shares advanced as high-tech investors looked for a less-risky place to invest. MCI Communications rose 3/8 to 36 3/4, Sprint rose 7/8 to 43 1/4, SBC Communications rose 1 to 54 7/8 and Bell Atlantic rose 1 5/8 to 69 3/4.
* Sears rose 2 1/8 to 53 5/8 after Merrill Lynch said any weakness in the stock is a buying opportunity, citing strength in the retailer’s profit margins.
* Philip Morris, down 1 1/4 to 119 7/8, led tobacco companies lower after a federal judge said the first phase of sweeping cigarette regulations by the U.S. Food and Drug Administration won’t be blocked before they take effect.
UST dropped 3/8 to 30 3/8 and RJR Nabisco Holdings fell 1/2 to 33 3/4.
* Chatsworth-based Plasma & Materials Technologies rose 3 1/4 to 15 1/8 after the semiconductor equipment company said it developed a way to increase chips’ speed.
At the New York Mercantile Exchange, March crude oil futures rose 23 cents to $22.46 a barrel. March heating oil gained 1.23 cents to 61.76 cents a gallon, and March gasoline rose 0.47 cent to 63.53 cents.
April gold futures fell 90 cents to $343.10 an ounce in New York trading.
Overseas, London’s FTSE-100 index ended 0.1 point lower at 4,307.7. In Tokyo, the key 225-share Nikkei average gained 314.13 points, or 1.76%, to close at 18,181.17.
