Blue Chips Dip on Housing Report but Nasdaq Continues Its Climb
Blue-chip stocks slid Tuesday after a surprisingly strong July housing report renewed inflation fears, while bonds weakened for the second day in a row as investors took profits from last week’s rally.
The euro tumbled to an all-time low against the Japanese yen and edged closer to a record low against the dollar amid a lack of confidence about Europe’s economy.
The technology-heavy Nasdaq composite index rose for the 11th time in 13 sessions, though its advance was tame, as investors scooped up shares of companies they think will have the fastest profit growth even as the economy slows.
But drug shares fell, dragging down the Standard & Poor’s 500 index, as reports from a cardiologist meeting in Amsterdam showed some medicines to be less effective than projected.
Nasdaq climbed 11.58 points, or 0.3%, to 4,082.17, bringing its slow but steady rise since Aug. 10 to 8.6%.
“It’s still a very favorable fundamental environment for the techs,” said Guy Truicko, a money manager for Unity Management. “There are tight supplies of semiconductors, strong demand across the board and very powerful earnings.”
The S&P; 500 fell 4.25 points, or 0.3%, to 1,509.84, after rising to within 1% of its record Monday. The Dow Jones industrial average dropped 37.74 points, or 0.3%, to 11,215.10.
Seven stocks fell for every six that rose on the New York Stock Exchange. Winners topped losers by 21 to 19 on Nasdaq.
In the Treasury market, the 30-year bond yield climbed to 5.75% from 5.72%.
Among the equity highlights:
* In the drug sector, Johnson & Johnson dropped for the fifth-straight session, sliding $1.75 to $93. The company said Monday its ReoPro clot-preventing medicine failed in a new study to reduce the risk of heart attack or death.
Dow component Merck dropped $1.31 to $71.19.
Investors said Vice President Al Gore’s continuing criticism, in stump speeches and TV ads, of profits by drug companies is weighing on the industry.
“Drugs are going to be in the doghouse until after the election,” said John Davidson, chief investment officer of Orbitex Management.
* Bank and mortgage stocks declined as a report that new-home sales rose unexpectedly last month revived investor concern that the Federal Reserve will raise interest rates again this year.
Fannie Mae fell $2.75 to $53.88, Citigroup sank 88 cents to $58, and Wachovia lost $1.13 to $55.69.
* Brokerages rose, with Donaldson, Lufkin & Jenrette surging $18.19 to a new high of $84 on speculation that it will be acquired.
Lehman Bros. gained $3.44 to $140.50, Raymond James Financial rose $1.75 to $28.88, A.G. Edwards advanced $2.72 to $54.41, and Bear Stearns climbed $3.31 to a new high of $63.13.
* In the tech sector, ADC Telecommunications gained $3.63 to $39.69 after Chief Executive William Cadogan said fiscal fourth-quarter sales will surge as much as 50% on demand for the company’s communications gear, parts and software.
* Network Appliance rose $5.38 to $109.25 as the maker of computers that store and deliver files on networks was selected by Continental Airlines to supply data-storage products. Continental dropped $1.13 to $47.88.
* Rambus dropped $3.38 to $80.63 after rival Micron Technology sued the semiconductor-design company, claiming its chip patents are invalid. Micron eased $2.06 to $87.25.
* Gliatech plummeted $15.19 to $10.19 after Guilford Pharmaceuticals called off its planned purchase of the company. Guilford rose $3.63 to $22.25.
* Among Southern California stocks, Irvine-based Micro Therapeutics jumped $1.88 to $7.31 as its aneurysm study was expanded, while Industry-based Hot Topic dipped $2.63 to $31.88 as Elizabeth McLaughlin was promoted to chief executive.
Market Roundup, C8-9
