Internet, Tech Stocks Lead Broad Decline; Dow Up 40
Stock prices ended broadly lower Wednesday as Internet stocks tumbled anew and bond yields rose further, awaiting key inflation data and a speech by Federal Reserve Chairman Alan Greenspan.
The technology-dominated Nasdaq composite index slid 71.17 points, or 1.8%, to 3,850.02, its fifth decline in seven sessions, indicating that profit-taking in the tech sector has not yet run its course.
The Dow Jones industrials inched up 40.02 points to 11,551.10, but losers outnumbered winners by 18 to 13 on the New York Stock Exchange and by 23 to 18 on Nasdaq.
The Nasdaq index opened 2000 at a record high on Jan. 3, then dove last week. Recoveries Friday and Monday raised hopes that the index was headed for new highs, but fresh selling Tuesday and Wednesday has spurred more pessimism.
“We’re having a general correction in technology stocks,” said Robert Streed, a money manager at Northern Trust Co. in Chicago.
Microsoft lost $3.56 to $105.81 on rumors that the Justice Department is favoring its breakup.
Meanwhile, Internet stocks remained under pressure in the wake of the merger proposed between America Online and Time Warner on Monday, as AOL has continued to slide.
Some analysts worry that the AOL deal, by creating a more traditional company, could dampen enthusiasm for all Net stocks.
What’s more, Internet portal Yahoo has plummeted over the last two days. The company on Tuesday warned of slower growth.
Yahoo slumped $39.81 to $357.56 on Wednesday, its lowest price since Dec. 17.
Other losers included EBay, down $8.81 to $130.38; Inktomi, down $12.63 to $87.31; Amazon.com, down $3.19 to $63.56; and Go2Net.com, down $7.56 to $72.50.
“I think Yahoo is a big part of it,” said Peter Coolidge, senior equity trader at Brean Murray & Co., referring to weakness in other Net stocks on Wednesday.
In addition, he noted, “This is all in an environment of higher interest rates.”
Bond yields continued to rise Wednesday, with the bellwether 30-year Treasury yield ending at 6.70%, up from 6.67% Tuesday and the highest since July 1997. Shorter-term yields also rose, and a key index of junk bond yields hit its highest level since 1994.
December inflation reports due today and Friday may boost expectations for higher rates, analysts said. Economists in a Bloomberg News survey forecast that both producer prices, due out today, and consumer prices, due Friday, rose 0.3% last month.
Clues on what Fed Chairman Greenspan is thinking about the Fed’s rate policy could come today: He speaks to the Economic Club of New York this evening.
The Fed is widely expected to raise its key short-term rate, now 5.5%, to 5.75% at its Feb. 1 meeting. But the bond market lately is acting as if the rate might rise to 6%, traders said.
Among Wednesday’s highlights:
* Falling tech stocks included Apple, down $5.56 to $87.19; Sun Microsystems, off $3.38 to $74.38; Gateway, down $2 to $58.50; and Oracle, off $6.75 to $105.63.
But semiconductor issues shined on growing optimism about earnings. Intel, which will report earnings today, rose $1.56 to $91.25 after hitting a new intraday record high of $94.75.
Also rising were Broadcom, up $16.50 to $284.50; Emulex, up $4.75 to $113.25; and Cypress Semiconductor, up $4.69 to $35.75.
* Non-tech sectors moving higher included utilities, chemicals, autos and bank stocks.
Market Roundup, C9
