Techs Snap Back; Blue Chips Falter
Technology stocks struggled higher Thursday, but blue-chip shares faltered, halting a three-day rally that had nearly halved a monthlong slide by the Dow Jones industrial average.
The Dow fell 21.27 points to 6,658.60 after giving back a 33-point gain that put the barometer of 30 big companies above 6,700 for the first time in three weeks.
Broad-market indicators turned mostly lower in the afternoon as investors moved to lock in some gains from the last few days.
“The market seemed a little tired today,” said Scott Bleier, chief investment strategist at Prime Charter Ltd.
Once again, the market turned in a mixed performance, but this time it was technology shares that rallied as blue chips fell victim to profit taking.
The Nasdaq market snapped a two-day losing streak, rising 6.80 points to 1,217.07 as investors bid up depressed computer-sector favorites such as Intel and Cisco Systems. Tech issues were also bolstered by a stronger-than-expected quarterly report from Digital Equipment and Cyrix.
“Techs had dramatically lagged and . . . it was like someone finally said it was OK to buy techs,” said Peter Coolidge, senior equity trader at Brean Murray & Co.
The day’s most anxiously awaited earnings news came after the close of trading, when Microsoft reported an 85% improvement in the first quarter.
The Dow’s performance since Monday was paralleled in recent history only by a 289-point surge in the two days after the “Black Monday” market crash of 1987.
Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange.
The Standard & Poor’s 500-stock list fell 1.76 points to 761.77 and the NYSE’s composite index fell 1.10 points to 400.65.
Stocks drew some early support from the bond market, where interest rates continued to ease lower after jumping toward another nine-month high Wednesday morning.
Bonds jumped after the Labor Department reported that new claims for unemployment benefits rose by 8,000 last week to 332,000, the highest level since late January. But the four-week average for first-time claims continued to hover near its lowest levels of the 1990s.
As bond prices rose, the yield on the benchmark 30-year Treasury bond fell as low as 7.03%, down from late Wednesday’s 7.09%, before settling at 7.06%.
Bonds reacted to a weaker-than-expected report on regional business activity from the Philadelphia Federal Reserve.
While the data did not eliminate market tension over the chances of another interest rate increase, analysts said it did offer at least some evidence that economic growth may be moderating.
“The Philly Fed numbers show some signs of slowdown in the manufacturing sector, and that’s a good thing,” said Bill Meehan, analyst at Prudential Securities.
Among Thursday’s highlights:
* Earnings dominated much of the session and investors again pummeled companies whose growth outlooks are in question.
The Dow was dragged down by Procter & Gamble, down 2 3/8 to 121 1/2, and Sears, down 2 to 46 3/4, on concerns of slow growth among consumer products makers.
* Positive earnings but growth concerns sank Gillette, down 3 7/8 to 78 1/2, and Kimberly-Clark, down 1 to 49.
* A day after news of a possible settlement of tobacco litigation that sent tobacco issues soaring, the sector fell. Philip Morris declined 1 5/8 to 41 5/8; RJR Nabisco Holdings lost 3/4 to 32 3/4; Loews dropped 1 7/8 to 89 7/8; and UST dipped 1/4 to 26 3/4.
* In the tech sector, Microsoft fell 1/8 to 98 1/8 in advance of its earnings, but rose as high as 103 in after-hours trading. Computer-chip maker Cyrix jumped 3 7/8 to 21 5/8 reported better-than-expected earnings.
Andrew slid 12 1/8 to 23 1/2 after the telecom equipment firm’s sales growth failed to match expectations. Raychem skidded 12 1/2 to 68 7/8 after cautioning about weak near-term results. DSP Communications was down 3 1/2 to 7 1/4, and ESS Technology fell 7 15/16 to 14 1/8.
But Digital Equipment rose 1 1/2 to 27 1/2 on better-than-expected results.
* American Airlines parent company AMR rose 2 1/2 to 87 1/2 on stronger-than-expected first-quarter earnings. United Airlines parent UAL Corp. added 1 5/8 to 74 5/8 and Delta Air Lines climbed 1 1/2 to 92 3/8.
* Tempering the losses were interest-rate sensitive issues. JP Morgan rose 3/4 to 97 1/4 and NationsBank gained 1/4 to 455 3/4.
Overseas, Tokyo’s Nikkei stock average rose 0.3%, Frankfurt’s DAX index rose 0.9% and London’s FTSE-100 rose 0.1%.
Market Roundup, D6
