Techs Reel as Dow Posts 4th Straight Gain
Another sell-off in tech issues pulled the Nasdaq market lower Tuesday, while blue chips advanced for a fourth session.
After trading ended, a poorly received earnings report from telecom giant Nortel Networks may have set the stage for another weak Nasdaq session today.
The Nasdaq composite slid 48.90 points, or 1.4%, to 3,419.79, after a morning rally gave way to fresh selling in the afternoon. Semiconductor stocks led the decline.
But the Dow industrials gained 121.35 points, or 1.2%, to 10,393.07, boosted by financial, heavy-industry and consumer-products issues.
Bargain hunting among bigger stocks gave winners a 16 to 13 edge over losers on the New York Stock Exchange, while losers had the edge on Nasdaq.
“Everyone was hoping that the bottom we set last week would be the bottom for some time,” said Robert Streed, manager of the Northern Select Equity Fund in Chicago. “We ran through a spate of bad news with earnings pre-announcements, and that’s supposed to be behind us. [But] it’s not entirely, as you can see with National Semiconductor.”
The chip company warned Monday that sales may slow because of weaker demand from makers of mobile phones. Its shares plunged $12.69 to $24.25 on the NYSE on Tuesday, slamming most other chip stocks as well.
Traders said many beaten-down tech stocks remain vulnerable to year-end tax-related selling, as investors who bought at much higher prices take losses for tax purposes.
“It is going to take a long healing process before any gains are sustainable” in the tech sector, said Steven Goldman, market strategist for Weeden & Co.
The tech-dominated Nasdaq index is down 32% from its all-time high reached in March.
Meanwhile, blue chips apparently seem a safer bet to many bargain hunters.
General Electric rebounded $3.63 to $53.38 one day after it announced a $45-billion deal to buy Honeywell, which gained $3.38 to $53.31. Both are Dow stocks.
Some consumer-products giants gained in the wake of Colgate-Palmolive’s strong earnings report. Colgate shares jumped $3.81 to $53.05, Procter & Gamble surged $4.06 to $73.63 and Kimberly-Clark, which reported earnings on Monday, soared $5.06 to $64.
In other trading, oil and natural gas futures prices pulled back, with gas reaching its lowest level in nearly two months amid warmer Midwest weather.
In currency trading, the battered euro inched up from near a record low against the dollar on speculation that finance ministers and central bankers meeting in Montreal this week may issue a statement supporting the currency. The euro ended at 83.7 U.S. cents in New York.
Among Tuesday’s highlights:
* In the chip sector, Texas Instruments slid $3 to $45.88, Vitesse Semiconductor lost $6.75 to $67.50, Intel dropped $1.31 to $42 and Xilinx fell $5.88 to $69.75.
Among chip-equipment makers, Applied Materials dropped $4 to $49.44 and Novellus Systems lost $3 to $39.
* Other tech losers included Hewlett-Packard, down $5.88 to $92.50; Gateway, down $4.42 to $49.98; Rational Software, down $2.81 to $62.44; and Broadcom, down $12.75 to $239.
* Financial stocks rebounding included American Express, up $2.75 to $57.13; Chase Manhattan, up $1.69 to $40.06; Washington Mutual, up $2.06 to $41.44; and Lehman Bros., up $3.38 to $62.50.
* Among industrial issues, paper and lumber stocks surged. Weyerhaeuser jumped $3.25 to $42.94, Bowater gained $3.69 to $49.38 and Georgia-Pacific rose $1.63 to $23.81.
* Energy stocks were broadly lower despite strong earnings reports. Exxon Mobil fell $2.31 to $86.75 and Noble Affiliates lost $2.56 to $39.38.
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Market Roundup: C8, C9
