Dow Slips Amid Resurgence in Chip Stocks
Profit-takers hit some of the recent stock leaders Tuesday, dragging the broad market lower.
In commodity trading, oil prices surged to 10-year highs in London, but eased in New York trading, awaiting data after the close on U.S. inventories.
On Wall Street, the Dow Jones industrials slid 109.14 points, or nearly 1%, to 11,067.00 after gaining 665 points from July 28 through Monday.
The Nasdaq composite, however, edged up 1.97 points to 3,851.66, boosted by semiconductor stocks. But Nasdaq surrendered most of a 39-point gain late in the session.
Losers outnumbered winners on the New York Stock Exchange and on Nasdaq, but volume continued to be modest, with just 1.35 billion shares changing hands on Nasdaq.
“There’s profit-taking on the Dow and a resurgence in the tech sector due to relative opportunities in semiconductors, which have been devastated in the past month,” said Barry Hyman, senior equity analyst at brokerage Ehrenkrantz King Nussbaum.
Home Depot led the Dow lower, tumbling $5.50 to $53.50 after its quarterly earnings report disappointed some investors.
Meanwhile, Sun Microsystems surged $3.31 to a record $117.38.
Despite the recent comeback in many blue-chip stocks relative to tech shares, “The [earnings] outlook for retailers is a lot more mixed than it is for Sun Microsystems or some of the semiconductor-equipment and chip companies,” said Gil Knight, who helps manage $13 billion for Allied Investment Advisers Inc. in Baltimore.
In the bond market, Treasury yields edged up, with some traders nervous about the next big move in oil prices. But the 10-year high in London prices was followed by an initial surge, then decline, in U.S. crude futures.
September futures lost 27 cents to $31.67 a barrel after hitting $32.70 a barrel. After trading ended, the American Petroleum Institute said U.S. inventories rose far more than expected last week.
Among Tuesday’s highlights:
* The Dow’s losses were concentrated in such recent leaders as Boeing, down $2.25 to $47.25; Coca-Cola, down $1.06 to $62; and J.P. Morgan, down $1.25 to $146.69. Also, Hewlett-Packard fell $3.50 to $111 ahead of its earnings report, due today.
* Brokerage stocks, also hot lately, fell. Lehman Bros. dived $6.63 to $130.75, Merrill Lynch lost $2.69 to $140 and Charles Schwab fell $2.25 to $37.75.
* Retailers were broadly lower on earnings concerns. Wal-Mart fell $1.31 to $51.56, J.C. Penney gave up $1.44 to $16.50, Target lost $2.94 to $27 and Federated Department Stores was off $1.38 to $25.63.
* In the tech sector, chip stocks got a boost from Morgan Stanley Dean Witter analyst Mark Edelstone. He said the semiconductor cycle hasn’t peaked and inventories remain low.
Winners included Cypress Semiconductor, up $2.31 to $43; Texas Instruments, up $3 to $66.50; Micron Technology, up $6 to $86.50; and National Semiconductor, up $3 to $41.
Chip companies “should be able to enjoy a strong rally here through the end of the year,” Edelstone said. He expects 40% revenue growth for the industry this year, followed by growth at the “upper end of my forecast range of 30% to 35%” in 2001.
* In the battered Internet sector, EBay rose $3.69 to $51.88, Amazon.com gained $2.69 to $37.56 and PSINet rose $2.06 to $16.50.
* Scientific Atlanta slid for a second day, down $4.75 to $77.50, after rival Philips Electronics won a big AT&T; contract for set-top cable TV boxes. Philips eased 56 cents to $45.94.
* HMO stocks fell in profit-taking. WellPoint Health slumped $5.19 to $85.94, and Aetna was off $1.44 to $57.63.
* Insurer Reliance Group rose nearly 5 cents to 25 cents, one day after saying it might file bankruptcy. Berkshire Hathaway reportedly is interested in buying some of the firm’s assets.
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Market Roundup: C8, C10
