Microsoft Drags Down Major Indexes
Microsoft deflated all three major market indexes Monday, falling sharply over uncertainty about settlement prospects in the government’s landmark antitrust case.
Microsoft’s decline, down $7.63 to $104.06, masked strength in other leading technology issues.
The Dow Jones industrial average fell 86.87 points to close at 11,025.85; the Nasdaq composite index eased 4.47 points to 4,958.56; and the Standard & Poor’s 500 lost 3.60 points to 1,523.86.
Trading volume was light, typical for recent Mondays. Losers outnumbered winners on the New York Stock Exchange and Nasdaq.
Nasdaq had traded as high as 5,022.23 Monday, nearing the record closing high of 5,048.62 set on March 10--before heavy profit taking in tech issues slammed the index.
On Monday, the rebound in many major tech shares continued. IBM, for example, rose $6.25 to $126.88 after Morgan Stanley Dean Witter raised its rating on the stock to “outperform” from “neutral.”
Also, Sun Microsystems rallied $4.75 to $105 as portfolio managers scrambled to add key tech stocks to their portfolios before the quarter ends Friday. Intel gained $3.63 to $142.69, America Online jumped $2.94 to $74.44 and Dell Computer advanced $1.44 to $57.88.
First-quarter earnings reporting season will gather momentum in mid-April, and some analysts expect tech stocks to remain strong as investors concentrate on high earnings growth rates.
Analysts surveyed by First Call/Thomson Financial expect 22% first-quarter profit growth from the telecom and computer-related companies in the S&P; 500, on average, over the previous year. That’s up from 14.6% last quarter and higher than the 18.3% average expected for the entire index.
In other trading Monday, bond yields mostly held steady, while near-term gold futures fell $4.60 to $280.10 an ounce, lowest since mid-December.
Among the market highlights:
* Market weakness was concentrated in financial stocks, as profit takers moved in after last week’s rally. American Express sank $5.13 to $150.50, Goldman Sachs dropped $9.31 to $112 and J.P. Morgan slid $5.69 to $131.13.
Also, Finova Group dropped $11.19 to $20.75 after the lender to mid-size companies warned that a bad loan will make it miss first-quarter profit goals and said its chief executive is retiring for health reasons.
TD Waterhouse, the third-largest online brokerage, was an exception, rising $2.81 to $25.69 after Morgan Stanley raised the stock to “strong buy” from “neutral.”
* In the biotech sector, Incara Pharmaceuticals soared $3.69 to $7.31 after saying it will receive a U.S. patent for its liver precursor cells. But other biotech names were mixed. Imclone Systems lost $5.13 to $88 and Genentech fell $7.38 to $154.63, while Affymetrix rose $2.81 to $158.56.
* Calpine slumped $8.75 to $81 even though the power-plant developer said it likely will beat analysts’ earnings estimates for 2000 as new projects boost electricity sales. An accounting watchdog group last week accused the firm of inflating revenue, which it denied.
Overseas, Japan’s Nikkei index rose 1.6% to a 2 1/2-year high, buoyed by news of the agreement to give Germany’s DaimlerChrysler a controlling interest in Mitsubishi Motors.
Hong Kong’s key stock index climbed 2.9% to a record.
Market Roundup, C12
