Tech Sector No Longer Tops S&P; List

Here’s a news flash: Technology stocks no longer dominate the U.S. stock market.

The 65% plunge in the computer and telecommunications stocks that Standard & Poor’s classifies as technology companies has knocked the industry group from its perch as the largest of the 11 industry sectors in the benchmark S&P; 500 index--a rank it has held since December 1998.

Shares of technology companies “have gone from euphoria to depression in one year,” said Lynn Yturri, who manages the $700-million One Group Equity Income Fund.

Tech stocks, which a year ago accounted for 35% of the S&P; 500, now make up 17.4%, less than the weighting of financial stocks, which account for 18.0%.

Double-digit gains for financial stocks such as Loews Corp. (ticker symbol: LTR), owner of insurer CNA Financial Corp., and USA Education Inc., (SLM) the No. 1 buyer of government student loans, have contributed to a 5% rise in the S&P; financial stocks index over the last year.

S&P;’s technology index, 81 companies ranging from Microsoft Corp. (MSFT) to Xerox Corp. (XRX), posted the biggest loss of the 11 S&P; groups in the last year and has fallen 30% since the end of December. Companies such as Yahoo Inc. (YHOO) and Cisco Systems Inc. (CSCO) fell more than 80% in the last 12 months.

Only nine of the stocks in the index have risen since the S&P; 500 peaked March 24, 2000.

Investors bid technology stocks higher as if growth in the industry would never slow, said Robert LaFleur, chief investment strategist at Northern Trust Corp. in Chicago.

Electronic-commerce software producer BroadVision Inc. (BVSN) tumbled 93% to lead the decline among technology stocks in the index. Yahoo, the owner of the most-used Web site for searching the Internet, slid 93% in the last 12 months and chip maker Conexant Systems Inc. (CNXT) lost 89%.

Investors in financial stocks can thank the Federal Reserve for that industry’s gains. The U.S central bank has cut interest rates by 1 1/2 percentage points this year in an effort to avoid a recession.

Money managers track the makeup of the S&P;, an index owned by McGraw-Hill Cos., because many are evaluated by whether their portfolios outperform the index. When computer-related stocks were rising in 1999 and early 2000, investors prospered by having a greater percentage of technology than the industry’s weighting in the benchmark.

Gold Stocks a Bright Spot on a Dismal Day On Tuesday, almost all that glittered was gold.

Gold stocks were the best performing issues in the Standard & Poor’s 500 index on a day the benchmark index staggered to a 3.4% loss. The S&P; gold and precious metals group gained 5.4% for the day.

“When there is nowhere else for safety, go to gold,” said Jake Dollarhide, a money manager with Tulsa, Okla.-based Fredric E. Russell Investment Management Co.

In all, just 44 S&P; 500 stocks managed gains as investors reacted to disappointing earnings and job cuts--signs corporate profits would not return to health any time soon.

Besides precious metals firms, discount retailers were one of the few bright spots, with the S&P; retail discount stores index rising 1.4%.

Among gold stocks, Barrick Gold (ABX) rose 63 cents to close $14.48, and Newmont Mining (NEM) gained $1.08 to close at $16.46.

Gold stocks also may have been helped by U.S. tensions with China that began Sunday when a U.S. surveillance plane collided with a Chinese jet fighter. China detained the U.S. crew after they made an emergency landing on the Chinese island of Hainan.

Gold is a traditional store of wealth in times of uncertainty, with some investors choosing to buy the shares of mining companies rather than hold the metal itself.

Gold futures edged up just $1.20 to $256.80 Tuesday.

Ameritrade Initiates Fees on Some Accounts Online brokerage Ameritrade Holding Corp. (AMTD) on Tuesday introduced new account maintenance fees, trying to get customers to trade more or put more money into their accounts as stock markets slump.

Ameritrade, which last week said it would cut 7% of its work force to rein in costs, will charge customers a quarterly fee for accounts that fail to meet certain criteria.

If an account open for more than six months falls below $2,000 in total assets or fails to make four processed trades during a six-month period, the customer will be charged $15 a quarter.

“The new quarterly maintenance fee is necessary to offset the costs to the company associated with carrying the lower balance and inactive accounts,” said Anne Nelson, vice president of marketing and product development.

Retirement and beneficiary accounts are exempt from the charge.

Starting on July 1, the Omaha, Neb.-based company will also charge customers a $2 fee for paper trade confirmations sent by mail. Ameritrade will begin sending financial statements and trade confirmations to customers by e-mail, which will carry no fee.

Ameritrade shares fell 50 cents to close at $5 in Nasdaq trading Tuesday.

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New Leader in the S&P; 500

Tech stocks, punctuating their yearlong collapse, have lost their position as the biggest industry sector in the Standard & Poor’s 500 index to financial stocks.

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S&P; 500 industry sectors, ranked by their percentage of the index’ overall market capitalization

Financials: 18.0%

Technology: 17.4%

Health care: 13.4%

Consumer staples: 12.9%

Consumer cycles: 8.8%

Capital goods: 8.7%

Energy: 6.9%

Communications: 6.1%

Utilities: 4.4%

Basic materials: 2.6%

Transportation: 0.8%

Source: Bloomberg News