Nasdaq Tech Rally Fizzles but the Dow Plows Ahead
Technology stocks sold off late Wednesday after an early rally, leaving the Nasdaq composite index in the red again.
Nasdaq eased 27.06 points, or 0.7%, to 3,658.46, the seventh decline in nine sessions.
Most other indexes closed higher, however, as some of the money coming out of tech stocks appeared to be looking for a home in non-tech issues.
The Dow industrials rose 80.58 points, or 0.8%, to 10,687.53, and the Standard & Poor’s index of mid-size stocks gained 0.9%.
Fresh economic data suggesting that the pace of business is indeed slowing gave some Wall Street traders more hope that the Federal Reserve won’t raise short-term interest rates when central bankers meet next on Aug. 22.
But in the bond market, yields on many Treasury securities rose for the day, reflecting disappointment that the government’s announcement about long-term bond auctions next week didn’t include a further paring of debt sales.
On Wall Street, losers topped winners by about 20 to 18 on Nasdaq, while winners had the edge on the New York Stock Exchange. Volume remained relatively subdued.
Nasdaq was up as much as 68 points Wednesday before pulling back in the final hours.
“This is yet another failed rally attempt,” said Ted Oberhaus, head of trading at Lord, Abbett & Co. in Jersey City, N.J.
Some traders say they’re waiting for Friday’s government report on July employment trends. If the report is weak enough, it could cement the belief that the Fed is finished tightening credit.
Other investors may be focusing on the risk that a continuing economic slowdown will hurt corporate profits.
“One of the casualties of what the Fed is trying to do will be corporate profits,” said Robert Bloom, chief investment officer at Friends Ivory & Sime Inc.
In commodities trading, crude oil rose almost 2% Wednesday after an industry report showed the biggest drop in U.S. crude inventories in six months as declining imports dampened prospects for an easing of tight supplies.
Inventories fell 3.1% last week, leaving them 13% lower than a year earlier, an American Petroleum Institute report said.
Near-term crude oil futures rose 47 cents to $28.26 a barrel in New York.
In currency trading, the euro continued its slide against the dollar, falling to 91.3 cents, the lowest since May 25.
Among Wednesday’s highlights:
* Dell Computer led tech stocks lower after an analyst cut his rating on the stock on sales worries. Dell slid $2 to $39.56.
Other losers included Intel, down $1.31 to $63.31; Cisco Systems, down $2.25 to $60.94; Applied Materials, down $2 to $72.56; Advanced Micro Devices, down $5 to $62.50; and American Power Conversion, down $2.06 to $22.94.
On the plus side, Cirrus Logic rose $1.69 to $21.44, Vitesse Semiconductor gained $1.44 to $56.50 and Hewlett-Packard was up $4.63 to $112.50.
* Kulicke & Soffa, a maker of semiconductor manufacturing equipment, was unchanged at $22.13. But after trading ended, the company said some customers were deferring orders, which will hurt second-half earnings.
* Drug stocks continued to rally. Johnson & Johnson rose $1.69 to $96.50, Amgen added $1.31 to $70.31 and Abbott Labs gained 56 cents to $42.75. But HMO Cigna fell $4.69 to $96.56 in the wake of its earnings report. The company said problems with its long-term disability business will cut into profit this year and next.
* Mascotech soared $4.50 to $16. The maker of metal parts for auto transmissions and drive gears agreed to be bought for more than $2 billion by a group led by David Stockman’s Heartland Industrial Partners. The purchase is the first investment by Stockman’s Bloomfield Hills, Mich.-based buyout firm.
* Amid continuing power shortages, utility stocks climbed again, lifting the Dow utilities index 1.7% to a record 339.20. Duke Energy jumped $1.69 to $65 and Southern Co. gained $1.06 to $26.13.
*
Market Roundup: C11-12
