Nasdaq Takes a Post-Holiday Plunge; Dow Finishes Higher
Major U.S. stock indexes went their separate ways Monday, with the blue-chip Dow Jones industrial average closing slightly higher while the tech-driven Nasdaq ended the day down more than 4%, in part on concerns about Microsoft’s outlook.
But the damage went way beyond the software giant as declining stocks outnumbered advancing stocks 29 to 13 on Nasdaq, and 17 to 13 on the New York Stock Exchange.
Post-holiday volume was low, however, with 1.5 billion shares traded on Nasdaq--of which156 million were Microsoft, whose volume was the third-heaviest ever for a U.S. stock.
The Nasdaq composite dropped 161.40 points, or 4.4%, to close at 3,482.48, its lowest since the devastating sell-off on April 14 that left the index at 3,321.49. During the session, the index fell as much as 298 points before rallying in the final hour.
The Dow rose 62.05 points, or 0.6%, to 10,906.10. The Dow recovered from a 146-point plunge in the opening minutes of trading, then swung between up and down territory for much of the day as slumping tech issues and buoyant “old economy” stocks dueled for leadership.
Broader stock indicators were mostly lower, despite strength in such sectors as drugs, beer, consumer products and retail. The Standard & Poor’s 500 fell 4.68 points, or 0.3%, to 1,429.86. The Russell 2,000 index of smaller companies fell 2.9%.
Among techs that bounced back from heavy intraday losses to close positive were Apple Computer, up $1.63 to $120.50; IBM, up $2.50 to $106.50; Oracle, up $1.63 to $72.44; and Intel, up 75 cents to $116.13.
But the prospect of slower computer sales weighed on the bulk of the technology group.
Cisco Systems slipped $1.69 to $63.44, Dell Computer shed $2 to $47.75 and Broadcom tumbled $10.63 to $141.88. Yahoo sagged $8.63 to $113.88 after Barron’s said the search engine’s ad revenue could diminish if Internet start-ups lose their venture capital streams.
Earnings woes weighed on Exodus Communications, down $25.19 to $82.50, and Critical Path, off $8.13 to $37.
But blue-chip financial stocks attracted buyers, lifting the Dow from its lows. American Express rose $7.06 to $150.06 after it reported earnings that surpassed Wall Street’s expectations.
Investors continued buying into the reviving drug sector, seen as a growth industry that is less volatile than tech. Merck gained $2.19 to $71.94 after reporting first-quarter profit that beat forecasts by a penny, while Warner-Lambert rose $4.69 to $118.13.
Bonds weakened on concern that economic reports this week will show growth and inflation are fast enough to prompt the Federal Reserve to keep raising interest rates. The benchmark 30-year yield rose to 5.87% from 5.83% Thursday.
Among other equity highlights:
* Genentech sank $17.88 to $103.88, its third straight decline, after questions were raised about the safety of its experimental cancer drug anti-VEGF.
* Rallying old-economy stocks included Anheuser-Busch, up $3.13 to $74.75; DuPont, up $1.75 to $56; Dow Chemical, up $3.63 to $109; and Sunoco, up $1.69 to $29.69.
* McDonald’s rose $2.69 to $38.50 after reporting first-quarter profit that beat the analysts’ estimate by a penny.
* Among Southland stocks, Santa Barbara-based Software.com skidded $14.50 to $69.50 and Camarillo-based Vitesse Semiconductor slid $7.25 to $50.63.
*
Market Roundup, C14-C15
