Dow Gives Back 156, but Smaller Tech Stocks Jump
Holding on to a gain in this stock market can be like holding on to a slimy fish.
The Dow Jones industrial average slid 156.68 points, or 1.5%, to 10,561.41 on Wednesday, closing at its low for the session and giving back about half of its rebound over the last two days.
In the broader market, major indexes were mixed. The Nasdaq composite closed up 6.88 points to 4,427.65 after rising as high as 4,477.
A bright spot was the Russell 2,000 index of smaller stocks, which jumped 1.4% to a record 547.76--a sign that some investors continue to prospect among lesser-known names, especially in the tech sector.
In other markets, oil prices gyrated but closed nearly unchanged, despite concerns that major producers may raise production soon.
The latest sign of a booming economy came Wednesday from the Commerce Department, which reported that housing construction soared in January despite a spike in mortgage rates.
“The U.S. economy doesn’t seem to be slowing down at all,” said Alan Ackerman, analyst at Fahnestock & Co. in New York.
But the government also said that import prices rose last month at their slowest pace in seven months. Today the government will report on January wholesale prices.
In any case, the bond market didn’t appear terribly shocked by the housing data, despite the implication that the Federal Reserve may continue to boost interest rates to brake the economy.
The 30-year Treasury bond yield inched up to 6.27% from 6.24% on Tuesday.
Fed Chairman Alan Greenspan today presents his semiannual economic testimony to Congress.
“Our expectation is for Mr. Greenspan to be hawkish” and signal the Fed will gradually raise interest rates until the economy slows, said Paul Thomas, bond analyst at Merrill Lynch & Co.
In commodity trading, crude oil futures for March fell as low as $29.35 a barrel before rebounding to end at $30.05, off 1 cent.
The Energy Department said Wednesday that crude oil inventories last week fell just 200,000 barrels, much less than expected.
Saudi Arabian Oil Minister Ali al Naimi said oil producers will guard against “any disequilibrium that may negatively impact the world’s economic growth”--yet another hint that production increases may be coming.
Among Wednesday’s highlights:
* Blue chips reversing after gaining Tuesday included Honeywell, down $1.25 to $44.88; American Express, down $5.28 to $153.84; and DuPont, down $1.38 to $53.38. But BP Amoco led energy stocks higher despite the Saudi comments. BP gained $1.88 to $49.25.
* Retail stocks came under pressure, led by Wal-Mart, down $5.25 to $52.75 after its warning this week that costs are increasing.
Home Depot slumped $2.50 to $57.25, Costco fell $1.63 to $47.75, Gap gave up $1.69 to $49, and Target dropped $2 to $61.81.
Abercrombie & Fitch plunged $4.25 to $15.25 as analysts downgraded the trendy retailer’s stock in the wake of the company’s small increase in comparable-store sales in the fourth quarter. Morgan Stanley Dean Witter cut its rating to “neutral” from “outperform.”
* Among tech issues, Applied Materials surged $6.88 to $173.38 after its strong earnings report. Adobe Systems also was hot, up $9.31 to a record $98.19.
But Intel slid $4.81 to $107.19, and Microsoft was down 94 cents to $97.63--its lowest since Dec. 13--as it launches Windows 2000.
Investors seemed to be buying less well-known tech names, including Unisys, up $4 to $34.25; Novell, up $2.38 to $40.75; and Macromedia, up $4.56 to $67.94.
* Internet stocks were generally lower, led by America Online, down $2.25 to $51.75, and Yahoo, down $8.44 to $161.56.
But Tibco Software rocketed $22.75 to a record $244.88, and VerticalNet gained $9 to $206.
* CheckFree Holdings soared $32 to $100.25 after it agreed to buy rival TransPoint, a joint venture of First Data and Microsoft, for $1 billion in stock. CheckFree, which lets consumers pay bills online, is trying to lock up a dominant position in the nascent electronic bill-payment industry.
Market Roundup, C10
