Nasdaq Leads Market Decline Amid Fed Fears
Nasdaq ran out of gas Thursday, cutting short a five-day winning streak that had brought the composite index above one important milestone--4,000 points--and nearly to another: where it began the year.
Investors locked in profits following a monthlong run-up in technology bellwethers, sending the Nasdaq down 127.17 points, or 3.1%, to 3,936.84.
The damage was less severe in the Dow Jones industrial average, which fell 121.62 points, or 1.2%, to close at 10,376.12, and the Standard & Poor’s 500, which fell 26.95 points, or 1.8%, to 1,452.18.
“Investors bought into the story of no interest-rate increases at this Fed meeting, but now they are not so sure,” said Rich Barnett, portfolio manager at City National Investments in Beverly Hills.
Federal Reserve policymakers, who meet Wednesday, have already raised rates six times in the last year to slow the economy and check inflation.
The Nasdaq topped the 4,000-point barrier Tuesday for the first time in more than two months. But the composite turned back down Thursday, and the selling in tech shares spread to other sectors, including tobacco, oil and chemicals.
Tech leaders that got clipped included Intel, off $4.94 to $134.06; Oracle, down $4.69 to $81.50; and Cisco Systems, off $2.88 to $64.56. Yahoo fell $11.13 to $131.69 after an analyst expressed concerns about the outlook for online advertising.
Micron Technology eased $3.88 to $86.88 as traders worried that the chip maker’s earnings, due after the session’s close, might fall short of expectations. The earnings report beat analysts’ estimates, however.
Mobile phone maker Nokia slid $4.50 to $56.50 on rumors that it is buying Qualcomm, which rose $3.75 to $68.25. Neither company returned calls seeking comment.
Among the Dow stocks, Philip Morris shed $1.06 to $23.94 and Honeywell dropped $2 to $35.
Declining issues outnumbered advancing ones by 8 to 5 on Nasdaq and 9 to 5 on the New York Stock Exchange.
Treasury yields held steady, with the 10-year T-note at 6.11%.
Other equity highlights:
* Rambus bucked the tech trend, rising $4.50 to $97.13 in regular trading after Samsung Electronics said it expects sales of memory chips based on Rambus’ designs to surge more than tenfold in the next two years. Rambus then rocketed to $137.56 in extended trading after the company settled a patent dispute with Hitachi, which agreed to license Rambus’ computer memory designs.
The sector’s gainers also included Burr-Brown, which rose $27.38 to $100 after the electronic components maker agreed to be bought by Texas Instruments, which eased 38 cents to $81.63.
Visx jumped $4.38 to $32.94 after the government said it will reissue the company’s patent covering its method for laser eye surgery. Alteon Websystems gained $9.38 to $91.88 after a Lehman Bros. analyst said revenue will be higher than expected in the current quarter because of rising sales of its Internet switch products. And Red Hat rallied $2.31 to $34.19 after Intel unveiled its first branded Linux product, a limited-function computer for e-mail and surfing the Internet.
* Pharmaceutical stocks fell after Europe’s Roche Holding warned analysts of slowing sales growth. Pfizer dropped $1.13 to $45.75 and Eli Lilly fell $2.25 to $84.50.
* Among Southern California stocks, ViaSat tumbled $11 to $43.69, Aurora Biosciences slid $10.19 to $60.06 and IDEC Pharmaceuticals lost $14.13 to $108.50, but Teledyne Technologies rallied $2.13 to $16.
Market Roundup, C5-6
