Blue Chips Gain But Tech Fears Depress Nasdaq
Blue chip stocks shook off a midday slide to close mostly higher Tuesday, but smaller stocks pulled back as concerns about technology companies’ earnings weighed on the Nasdaq market.
Those worries proved accurate after the market closed, as computer chip giant Intel reported lower-than-expected earnings.
The Nasdaq composite finished down 9.33 points at 1,732.79, even as the Dow Jones industrials added 24.07 points to 8,096.29.
In the broad market, winners edged losers on the New York Stock Exchange, while losers topped winners by 23 to 20 on Nasdaq.
The Russell 2,000 index of smaller stocks also had its winning streak interrupted. It fell 1.24 points to 463.97.
Blue chips were helped by strong earnings reports from such companies as Pfizer, which rose $3 to $67.88; Honeywell, up $4.19 to $72.69; and Ameritech, up 44 cents to $67.94.
But the tone for technology stocks was set by Texas Instruments early in the day. Even though the company reported quarterly operating earnings of $1.20 a share, up from 6 cents a share a year ago--and well above the $1.14 analysts had expected--Texas Instruments’ shares fell $5.44 to $135.56.
That shifted the focus to Intel’s report, which came after the market closed. Nearly 22 million Intel shares changed hands before the report, and the stock fell 75 cents to $91.81.
The stock quickly fell further in after-hours trading, after Intel reported results that were less than expected.
That could lead to more tech selling today, some analysts warn.
“One of the legs of this bull market has been the earnings picture and Intel is one of the lead sled dogs. They are a benchmark company and they indicate the sustainability of rapid earnings growth in the technology area,” said Joseph Barthel, chief investment strategist at Fahnestock & Co.
While tech stocks struggled Tuesday, the bond market rallied. The yield on the 30-year Treasury bond slid to 6.35% from Friday’s close of 6.42%. The bond market was closed Monday for the Columbus Day holiday.
Federal Reserve Board Chairman Alan Greenspan, speaking at Connecticut University, didn’t reiterate last week’s comments that the pace of economic growth could lead to greater inflation.
Among Tuesday’s highlights:
* Of Dow-component companies reporting quarterly earnings, General Motors fell $1.06 to $70.38, Johnson & Johnson slipped 19 cents to $60.44 and Eastman Kodak rose $1.13 to $64.69.
* Meanwhile, Delta Air Lines surged $3.06 to $104.63 after it surprised Wall Street by projecting higher earnings in the quarter just ended. The company several weeks ago had said it expected to post lower results.
Other airline winners included UAL, parent of United, up $2.50 to $94.38; and Southwest, up $1.50 to $35.
* Tech stocks weakening with Texas Instruments included VLSI Technology, down $3.19 to $73.63; Compaq, down $3.19 to $73.63; IBM, down $1.19 to $103.31; and Western Digital, down $1.19 to $39.63.
* In the takeover arena, Network General rose 94 cents to $24.31 after McAfee Associates disclosed late Monday that it will buy the company for about $1.3 billion in stock. McAfee, however, tumbled $6.56 to $59.81.
* Oil field services shares continued to plunge as crude oil prices wilted. Halliburton slumped $2.19 to $55.56, Western Atlas dropped $1.44 to $89.94 and Schlumberger was off $1.06 to $85.88.
Overseas, Tokyo’s Nikkei stock average rose 0.6% after falling to a two-year low on Monday.
In Mexico City, the Bolsa index surged 1.4% to 5,323.98 in advance of what is expected to be a strong September industrial production report today.
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Market Roundup, D10
