Techs Down Again as Rally Fizzles
Major technology stocks surrendered an early rally to close lower again Tuesday, while the blue-chip Dow Jones industrials eked out a small gain.
Earnings jitters continued to dog the tech sector, leaving many computer-related issues with their fifth decline in six sessions.
The Nasdaq composite fell 46.84 points, or 1.2%, to 3,849.51. The index has fallen 9.1% from its recent peak reached on Sept. 1.
The Dow, meanwhile, added 37.74 points, or 0.3%, to 11,233.23. But most major indexes closed lower. The New York Stock Exchange composite eased 0.2%.
Winners and losers were nearly even on the NYSE, while on Nasdaq losers dominated winners 11 to 9.
With more data suggesting the economy is slowing, the likelihood of another interest rate hike this year by the Federal Reserve is fading.
But investors increasingly are concerned “about the economy’s slowing down and what effect it’s going to have on [corporate] earnings,” said John Forelli, who helps manage $30 billion at Independence Investment Associates in Boston. “People are always worried about valuation, and the most expensive stocks are the ones that are potentially most vulnerable.”
Software giant Oracle, which will report quarterly earnings Thursday, fell $4.06 to $79.38.
“Oracle’s earnings will be key” in helping determine the direction of tech shares, said Gary Kaltbaum, analyst at JW Genesis Securities in Orlando, Fla.
Among other major tech stocks, JDS Uniphase fell $6.56 to $103.19, Cisco Systems lost $2.31 to $58.88 and Applied Materials dropped $3.50 to $71.69.
The major indexes changed course several times during the day. The selling pressure on Nasdaq turned heavy in the final two hours.
In other markets, bond yields were mostly flat, while the euro edged up from Monday’s record low to close at 86.3 cents.
Among Tuesday’s highlights:
* Telecom stocks followed tech issues lower. Lucent Technologies slid $2.13 to $36.75, Ciena dropped $5 to $179 and Nortel Networks dropped $4.50 to $64.56.
But Qualcomm rose $3.31 to $61.44. The Financial Times of London reported that the Chinese government has renewed its commitment to adopting a U.S. mobile phone standard developed by Qualcomm. China’s cell-phone market is the world’s second-largest.
* Solectron, the world’s biggest maker of electronics for other companies, added 25 cents to $46.25 after it reported fiscal fourth-quarter net income that beat expectations.
* Tenet Healthcare jumped $2.69 to $34.31 after the hospital company said profit in its fiscal first quarter will beat estimates.
Other hospital stocks also rose. HCA-Healthcare gained $1.94 to $35.44 and Health Management Associates climbed $1.19 to $17.88.
* Bank stocks showed little reaction to rumors of a Chase Manhattan-J.P. Morgan merger. Bank One added 25 cents to $38.19; U.S. Bancorp eased 19 cents to $22.13.
* Food stocks attracted interest. Hershey Foods rose 94 cents to $45.13, Kellogg added 50 cents to $24.69 and Pepsico gained $1.13 to $43.88.
* Best Buy jumped $4.75 to $69.19 after the consumer electronics retailer reported fiscal second-quarter net income that beat analysts’ estimates.
* Nike surged $3.14 to $39.77 after brokerage Goldman Sachs recommended buying the shares. The stock, which has declined 14% in the last three weeks on concern about the weak euro’s effect on earnings, has fallen further than justified, Goldman said.
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Market Roundup: C11, 12
