Stalled Tech Stock Rally Leaves Market Indexes Mixed

What looked like a promising day on Wall Street turned sour late in the session Friday when skittish investors caused a technology rebound to stall.

When the dust settled, stock indexes ended another tumultuous week mixed.

The Nasdaq composite closed up 47.36 points, or 1.8%, at 2,645.29. But the tech-heavy index was up more than 150 points early in the session, following the big sell-off Thursday that saw the Nasdaq briefly trade below 2,524.31--the point at which it was down 50% from its record closing high of 5,048.62 on March 10.

For the week the index lost almost 9%.

The Dow Jones industrials rose more than 100 points in early trading but ended the session down 40.95 points, or 0.4%, at 10,373.54. The Dow was off about 1% for the week.

The Standard & Poor’s 500, after struggling to stay in positive territory, closed up 0.28 of a point, or 0.02%, at 1,315.23. For the week, the S&P; was down 2%.

Advancing issues outnumbered decliners 2 to 1 on the New York Stock Exchange, where volume was heavy, though below Thursday’s pace. On Nasdaq, five stocks rose for every three that fell, and volume was 2.2 billion shares--heavy, but well below Thursday’s near-record of 2.7 billion.

The early bounce Friday was caused by bargain hunters scouring the technology sector for values on beaten-down stocks, said Alan Ackerman, executive vice president of Fahnestock & Co.

But many traders apparently decided to bail out of the market ahead of a U.S. Supreme Court decision on the presidential election.

Investors’ noncommittal tone wasn’t improved by the influential investment bank Goldman Sachs, which revised its estimate for growth for the U.S. economy in the fourth quarter to a 2.7% annual rate from 3.8% and said recession risks were rising.

Goldman said its forecast of 3.1% annualized growth for the first half of 2001 was also at risk given mounting evidence that momentum in the world’s largest economy is slowing.

On Wall Street, weakness in a number of blue-chip sectors was attributed primarily to a rotation of money out of those areas and into the high-tech arena.

Technology stocks have been pummeled for months as company after company has issued warnings that earnings will be below expectations. Computer maker Gateway was the culprit Thursday, announcing that holiday sales are down. The notice brought Gateway prompt downgrades from major brokerages and sent markets reeling across the board.

After falling 35% on Thursday, Gateway barely moved Friday, rising 12 cents to $19.12. IBM rebounded, however, closing up $2.13 at $95.88.

Chip makers, whose fortunes rise and fall on the back of computer sales, also benefited from the bargain hunting. Applied Micro Circuits rose $4.31 to $52.75 and Vitesse Semiconductor gained $6.06 to $49.19. But sector bellwether Intel hit a new 52-week low, losing $3.94 to close at $34.13.

A diverse handful of hard-hit tech stocks also fared well, including Juniper Networks, up $7.25 at $131.88, Veritas Software, up $11.38 at $108.94, and JDS Uniphase, up $6.13 at $56.19.

A down day for drug and consumer product stocks helped pull down the blue-chip sector, with the Dow’s Merck down $2.06 at $90.63, Johnson & Johnson off $2.25 at $97.75 and Procter & Gamble down 94 cents at $73.94. Analysts attributed the sell-off to investors moving money into beaten-down tech stocks, and not to any fundamental problems bearing down on the companies themselves.

Defense and utilities stocks suffered the same fate.

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(C1) Semi-Bounce

Nasdaq tried to bounce back Friday from a tough week, but a late sell-off erased much of 150-point gain.

Nasdaq, hourly and close

4 p.m. EST Thursday close: 2,597.93

4 p.m. EST Friday close: 2,645.29

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Source: Bloomberg News

** Market Roundup, C4, C5