Stocks Finish Mixed as Tech Issues Decline
Wall Street managed a mixed showing Monday despite a steep slide in some key technology issues.
The Nasdaq composite index sank 14.41 points, or 0.9%, to 1,634.92, dragged down by Microsoft and some other major tech names after the software giant announced the delay of a major new product.
The Dow Jones industrial average, pressured by declines in Boeing and Kodak, ended down 21.83 points at 7,721.14 after an early rally.
Still, rising stocks outnumbered losers by a margin of 15 to 13 on the New York Stock Exchange and by 21 to 20 on Nasdaq.
And the Russell 2,000 index of smaller shares edged up 0.08 point to 440.17, yet another record high.
Microsoft shares started the day lower on a Barron’s magazine report that said the software giant’s stock was overvalued and that the company may have a hard time dominating the industry in the future.
But the big decline came at midafternoon, when Microsoft said its Windows 98 software will come out three months later than expected to give testers more time to root out bugs in the program.
Microsoft slumped $7.25 to close at $130.69 on Nasdaq on the news.
Meanwhile, Kodak tumbled $5.50 to $60 after it warned of weaker-than-expected quarterly earnings. Boeing lost $1.50 to $51.44 on concerns about a delay in jet deliveries.
Blue chip stocks have been under pressure since early-August on concerns about the companies’ earnings growth. Coca-Cola, Gillette, Motorola and others already have said their results won’t meet expectations in the near term.
“We saw a sobriety check go on in the market,” said Larry Wachtel, a market analyst at Prudential Securities. “After the Microsoft announcement, investors began to question their positions with these wild tech stocks.”
“There’s reason for concern in terms of slower earnings,” said David Diamond, head of equity policy at money manager Boston Co.
Kodak, struggling with intense competition and the impact of a strong dollar, said Monday it expected to post lower sales and earnings in its current quarter.
The troubled film giant, which posted disappointing results in the prior quarter as well, said it plans to take “strong action” by eliminating “money losers” and nonstrategic units to reduce its cost structure.
As blue chips have pulled back in recent weeks, investors have sought out smaller stocks--a trend that still appears to be in place, analysts say.
Meanwhile Monday, the bond market was mostly flat. Long-term yields eased slightly lower after sliding on Friday in the wake of a favorable report on August wholesale inflation.
The government reports August consumer inflation today.
Among Monday’s highlights:
* Tech shares pulling back included Intel, down $2.19 to $92.06; IBM, down $1.50 to $96.25; Motorola, down $2.19 to $67; Cisco Systems, down $2.50 to 69.75.
* AT&T; continued to buck the downtrend, rising $1.38 to $44.19 on speculation about who the company’s new CEO will be.
* Oil-services shares also were strong again. Western Atlas surged $2.06 to $89.06, Baker Hughes gained $1.38 to $43.94 and Transocean Offshore zoomed $3 to $96.50.
* Manor Care jumped $3.13 to $34.25. The company approved a plan to split into two publicly traded companies, one to develop and the other to manage facilities to care for Alzheimer’s-disease patients and nursing-home residents.
In currency trading, the dollar fell to its lowest level against the German mark in two months, closing at 1.763 marks in New York, on fresh concern that the German central bank will raise interest rates soon. (Manager’s Forum, D4; Investor Spotlight, D16.)
Market Roundup, D12