Broad Market Wallows as Tech Shares Continue Slide
Computer-related shares slid sharply Monday, but the broad market suffered only minor losses as overall profit expectations remained firm despite a spate of warnings by big-name technology shares.
The Dow Jones industrial average fell 2.25 points to 8,567.14. A midday gain of 55 points had put the Dow above 8,600 for the first time, briefly topping Tuesday’s record close of 8,584.83.
Broader stock measures also pulled back during the afternoon, but only the technology-laden Nasdaq composite index suffered heavy damage, falling 28.33 points, or 1.6%, to 1,725.16.
Outside the tech sector, losses in the broader market were modest due to the bolstering impact of more merger mania on Wall Street, a rebound in the long bond and a drop in crude oil prices, which boosted airline stocks again.
Bonds extended Friday’s rebound. The yield on the benchmark 30-year Treasury bond fell to 5.96%, the lowest in a week, from 6.02% on Friday. The two-year note yield fell to 5.54% from 5.57%. Yields and prices move in opposite directions.
On Wall Street, Compaq Computer fell $2.19 to $25.44 after the company warned after the close of trading Friday that it would break even in the first quarter, shocking investors who had expected the world’s biggest maker of personal computers to post a profit. The announcement followed similar warnings from Intel and Motorola.
Analysts said Wall Street was braced for a personal computer price war, with Compaq expected to go after Dell Computer’s market share.
IBM was down $2 at $96.13. Dell, the most active stock on Nasdaq, shed $6.13 to $63.13. Intel fell $3.06 to $75.06. Motorola gained 6 cents to $53.06.
The recent batch of earnings warnings prompted investors to take profits in leading tech issues and shift their cash to safer sectors.
“Investors are switching away from companies that have earnings problems to those that don’t, but the money does not want to leave the market,” said Charles Pradilla, market analyst at Cowen & Co.
The biggest loser for the day was aerospace concern Northrop Grumman, which plunged $20.13 to $117.50 on news that the Justice Department opposes its merger with Lockheed Martin. Lockheed was up 81 cents at $116.
Among Monday’s highlights:
* Major oil company stocks fell on the slump in oil prices. Exxon lost 25 cents to $62.50 and Chevron sank $2.50 to $82.94.
* The prospect of cheaper jet fuel lifted airline stocks. US Airways gained $1.25 to $72.38 and AMR, parent of American Airlines, jumped $3 to $138.38.
* Internet stocks soared. Yahoo, the top Internet directory, climbed $7.25 to $87.81. Rival Excite jumped $5.06 to $53.50 and Infoseek rose $2.03 to $20.41. Internet bookseller Amazon.com surged $6.75 to $83.50, all record closes.
* Mossimo was one of the highest percentage gainers on the NYSE, rising 81 cents, or 17.1%, to $5.56.
The Standard & Poor’s composite index of 500 stocks was off 3.39 points at 1,052.30. The American Stock Exchange index fell 3.60 points to 709.31.
The NYSE composite index of all listed common stocks was off 0.20 point at 549.44. The average share was down 2 cents.
The Wilshire Associates equity index--the market value of NYSE, American and Nasdaq issues--was 10,032.410, down 33.537 points, or 0.33%.
The Russell 2,000 index of smaller companies fell 2.60 points to 461.12, and the small-company-dominated American Stock Exchange composite index fell 3.60 points to 709.31.
Overseas, Tokyo’s Nikkei stock average fell 0.9%, Frankfurt’s DAX index rose 1.4% and London’s FTSE-100 rose 0.6%.
Market Roundup, D14
