Tech Stocks Pull Dow Down; Bond Yields Slip
Computer-chip makers led the U.S. stock market down Friday after National Semiconductor warned it will lose money until the end of the summer.
The pessimistic outlook from one of the nation’s biggest semiconductor companies followed unexpectedly weak earnings from personal-computer maker Hewlett-Packard.
After a late-day sell-off, the Dow Jones industrial average lost 76.23 points, or 0.8%, to 9,096.00. The technology-heavy Nasdaq composite index shed 18.59 points, or 1%, to 1846.77.
Asian markets stabilized despite the strife in Indonesia’s riot-torn capital and paralysis gripping the country’s financial markets.
After several days of sharp losses and volatility caused by Indonesia’s descent into chaos, dealers said the region’s markets had priced in most of the bad news from Jakarta, though trading was still very cautious. Most Asian currencies firmed slightly.
The Indonesian rupiah and stocks were shielded from heavy falls by a virtual lack of trading. The central bank announced in the morning that all banks would be shut and there would be no currency trading.
The stock market in Jakarta opened for business, but volume was painfully thin, as only 21 trades were completed and the market ended up 0.6%.
“There’s a realization that this Asian situation is not just a one-quarter phenomenon, but rather one that is probably going to have a longer-lasting impact,” said Jeff Petherick, a money manager at Loomis, Sayles & Co., which oversees $10 billion. “It is not an easily solvable problem.”
In the U.S., National Semiconductor fell $1.56 to close at $17.31 after the company said earnings will be hurt by slowing sales of its chips to PC makers. The company was expected to report a loss of 19 cents a share in the fourth quarter ending May 31 and a profit of 3 cents a share in the first quarter.
The yield on the benchmark 30-year Treasury bond edged down to 5.97% from 5.98% on Thursday on optimism that the Federal Reserve Board will leave interest rates unchanged at its policy meeting Tuesday. Despite a report Friday showing an unexpected rise in factory employment, “this is an economy that is growing, but there is absolutely no inflation,” said Scott Grannis of Western Asset Management in Pasadena.
The Standard & Poor’s 500-stock index fell 8.64 points, or 0.8%, to 1,108.73. For the week, it was up 0.05%. The Dow gained 0.5% for the week.
Three stocks fell for every two that rose on the New York Stock Exchange on Friday. About 622 million shares traded, roughly average for the last three months.
Among Friday’s highlights:
* Hewlett-Packard shares slid 88 cents to $69.44 after the company reported that it earned 65 cents a diluted share in the second fiscal quarter ended April 30. On Thursday, HP’s shares sank $11.31 after warning that earnings would fall short of the 78 cents expected by analysts because of price cuts on personal computers.
* Chip makers have suffered because computer makers are putting pressure on them to lower the prices of their components. Intel fell $4.25 to $80.31, Texas Instruments fell $3 to $59.13, Micron Technology dropped $2.19 to $27.94, and KLA-Tencor slumped $1.56 to $38.44.
* Walt Disney accounted for a large part of the Dow’s decline, falling $5.44 to $110.63. Jessica Reif Cohen of Merrill Lynch cut her rating to “neutral” from “accumulate,” citing concern over the cost of getting rights to air National Football League games on ABC and ESPN.
* Microsoft was a moderate bright spot in the market. It edged up 50 cents to $89.44, a day after antitrust enforcers said they would negotiate with the software maker rather than sue the company as planned. The news sparked optimism that Microsoft will be able to proceed with the release of its new Windows 98.
Market Roundup, D4
