Dow Inches Up but Nasdaq Takes a Tumble
The market continued its disjointed performance on Wednesday, as the Dow Jones industrials closed slightly higher while the technology-heavy Nasdaq composite index plunged.
The blue-chip Dow eked out a 3.10-point gain to 11,032.99, boosted by financial stocks as long-term bond yields slid again.
But the Nasdaq index dove 97.50 points, or 2.3%, to 4,069.91--and that was before Dell Computer warned after the market closed of weaker-than-expected earnings.
“[The tech sector] had been showing signs of cracking and it really kind of came unglued,” said Ricky Harrington, a technical analyst with Wachovia Securities in Charlotte, N.C.
The Nasdaq index closed at its low for the session.
In the broad market winners had a modest edge over losers on the New York Stock Exchange, while losers had the edge on Nasdaq. Volume remained extremely heavy on Nasdaq.
The bond market gave financial blue chips a boost: Long-term Treasury bond yields fell for a fourth straight session, the longest streak since November. The benchmark 30-year T-bond yield ended at 6.57%, down from 6.63% Tuesday.
The Federal Reserve is expected to raise short-term interest rates when it meets next week, but bond investors lately are taking a more positive view of the Fed: If higher short-term rates indeed slow the economy, long-term yields may come down sooner than later.
But higher short-term rates typically aren’t a friend to the stock market, analysts warn.
Among Wednesday’s highlights:
* Compaq Computer, which warned Tuesday of slower growth, slid $2.13 to $28.88. That tainted other computer-related stocks, well before Dell made its announcement after markets closed.
Hewlett-Packard lost $3.88 to $108.75, Microsoft skidded $3.44 to $99.38, Intel dropped $5.06 to $96.50, and EMC lost $9 to $111 despite beating profit expectations.
On the plus side, EBay jumped $16.06 to $153.56 after saying fourth-quarter profit rose and sales more than doubled as the number of bidders and sellers quadrupled at its auction Web site. Siebel Systems soared $10.25 to $95.38 after the maker of customer-service software said profit doubled.
And Covad Communications rose $2.94 to $73.69 after the high-speed Net access provider reported a narrower-than-expected loss.
* Cellular phone chip maker Qualcomm tumbled $24.38 to $124.63 after it, too, warned Tuesday of slower near-term growth.
* Biotech giant Amgen slumped $5.25 to $64.13 after saying earnings growth will slow this year because of spending to introduce new drugs.
* Among blue-chip companies reporting earnings, McDonald’s sank $4.06 to $35.75, earlier hitting a 52-week low of $34.69, after missing the consensus estimate by a penny a share.
* As money rotated out of tech stocks, beneficiaries included established names such as 3M, up $4.94 to $96.31, and Corning, up $4.75 to $156. Some retailers also were strong. Dayton Hudson gained $3 to $68.13 and Abercrombie & Fitch rose $2 to $22.88.
* The financial services sector rallied as bond yields fell and amid robust fourth-quarter earnings from Merrill Lynch and others. Dow component J.P. Morgan surged $7.19 to $123.38, Morgan Stanley Dean Witter rose $3.44 to $132.88, American Express advanced $1.38 to $159.75 and General Electric, whose GE Capital unit is the largest non-bank finance company, climbed $2.94 to $141.44.
* Paper products and chemicals stocks also rallied as companies beat profit expectations. Louisiana-Pacific added 44 cents to $12.75 and Rohm & Haas jumped $3.31 to $43.31.
In foreign trading, major indexes rose 1.1% in Japan, 2% in Germany, 1.6% in France and 3.3% in Argentina.
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Market Roundup, C10
