Techs Battered Again; Dow Ekes Out Gain
“New-economy” tech stocks again found themselves begging for buyers on Thursday, while some investors turned back to “old-economy” names.
Meanwhile, oil prices topped $30 a barrel for the first time in two months, and bond yields rose.
The Nasdaq composite slumped 106.25 points, or 2.9%, to 3,538.71, closing at its low for the day as late selling hammered some big-name tech issues. Cisco Systems, for example, fell $2.63 to $55.38, sliding below its mid-April low to a level last seen in late January.
The Dow Jones industrial average inched up 7.54 points to 10,777.28, boosted by buying of such old-economy names as Coca-Cola, up $1.19 to $49.44, and Johnson & Johnson, up $1.44 to $88.50.
But the New York Stock Exchange composite index slipped 0.2%, and losers outnumbered winners on both the NYSE and on Nasdaq. Trading volume continued to be weak.
Some analysts argue that investors aren’t fleeing tech stocks so much as they simply aren’t stepping up to buy more.
“There’s a lot of cash out there and yet we see only very selective buying,” said Donald Berdine, investment chief at PNC Advisors. “There’s very, very little conviction and very few heroes to step up.”
Whatever the cause, the renewed pressure on big tech names hit some issues hard Thursday. Sun Microsystems slumped $5.44 to $80.88, a 6.3% drop. Oracle fell $5.13 to $73.06, a 6.6% decline.
The commodity and bond markets aren’t helping matters. Near-term crude oil futures in New York jumped $1.01 to $30.33 a barrel, highest since March 17, on fresh concern that gasoline might be in short supply this summer.
U.S. gasoline inventories are 8% lower than a year ago at 201.3 million barrels, according to the American Petroleum Institute. Even with U.S. refiners steadily boosting production, traders are concerned about shortages and the possibility that overseas refiners can’t meet stricter summer gasoline standards.
Higher oil prices helped boost the Commodity Research Bureau/Bridge index of major commodities 0.6% to a two-year high on Thursday.
Long-term bond yields, sensitive to rising commodities and other inflation pressures, also rose. The 10-year Treasury note yield ended at 6.54%, up from 6.49% on Wednesday and nearing the recent high of 6.56% set on May 8.
As for stocks, it could take several weeks before the market breaks out of a narrow range, some analysts say. Investors now face a dry spell of major economic reports, with little to indicate whether the Federal Reserve’s series of rate increases are slowing the economy.
Among Thursday’s highlights:
* Other tech losers included Agilent Technologies, off $7 to $71; 3Com, down $2.38 to $43.13; ISS Group, down $11.38 to $81.63; and CMGI, which fell $3.94 to $56.13.
* The telecom sector was hit hard by networker Equant’s report of a larger-than-expected quarterly loss. Equant shares plummeted $14.50 to $46.88.
Also adding to gloom in the telecom arena: MCI WorldCom slid $2.44 to $39.56 on reports that the government wants to block the company’s merger with Sprint.
* One winner in telecom was GM Hughes, up $4 to $92.25 after Merrill Lynch upgraded the stock to a “Focus 1” selection because of its booming satellite communications business. Parent General Motors surged $3.13 to $89.50.
* National Discount Brokers soared $5 to $29.50. Germany’s Deutsche Bank formalized a plan, announced in March, to buy up to 19% of the brokerage, paying $45.31 a share for 3 million new shares.
* Many HMO stocks surged on expectations that premiums will continue to rise. UnitedHealth soared $2.88 to $77.50 and Cigna gained $2.63 to $86.50.
* Other old-economy names advancing included Avon, up $1.06 to $41; Gillette, up $1.38 to $39.25; and Clorox, up $1.25 to $40.81.
Overseas, Asian markets were again hit hard. Tokyo’s Nikkei-225 index slumped 2.1%, while Hong Kong shares tumbled 3.4%.
Market Roundup, C7-C8
