Dow Flirts With 11,000; Nasdaq Slips
Investors in search of safer investment bets sent blue chips sharply higher Monday. Technology issues slid for a second straight session, reflecting fears that the already battered sector will suffer the most in an economic slowdown.
Analysts said many investors unloaded high-tech issues amid their nervousness about bellwether Cisco Systems, which is expected to release earnings today.
The Dow Jones industrial average rose 101.75 points, or 0.9%, to 10,965.85. Broader market indexes ended the session mixed. The tech-laden Nasdaq composite index slipped 17.29 points, or 0.7%, to 2,643.21, but the Standard & Poor’s 500 index advanced 4.84 points, or 0.4%, to 1,354.31.
It was Nasdaq’s lowest close since Jan. 16, but late buying helped erase much of a 2% loss from earlier in the day. The Dow, meanwhile, is once again flirting with 11,000. Its last close above that benchmark was on Sept. 14.
Corporate profits again were the focus, with the tech sector under especially strong scrutiny in advance of Cisco’s results and its outlook for future quarters. The network equipment maker’s stock fell 94 cents to $34.56.
“Meeting earnings shouldn’t be a problem, but it’s Cisco’s outlook going forward that’s important,” said John Forelli, portfolio manager at Independence Investment Associates. “If they are cautious in their comments about the future, it will give people a reason to sell.”
The apprehension spread to other tech stocks, particularly computer companies and semiconductor makers, which slid after influential analyst Dan Niles of Lehman Bros. said he expects the worst is yet to come for the industries.
Sun Microsystems lost $1.31 to $27.88, Altera fell $1.44 to $28.25 and Intel slipped 86 cents to $34.81. But IBM gained $1.95 to $112.22.
Growing evidence that the economy is slowing more than analysts had thought has made Wall Street uneasy, sidelining many would-be buyers. Trading was slow on the New York Stock Exchange as well as on the Nasdaq Stock Market, where 1.6 billion shares changed hands. Losers beat winners by 11 to 8 on Nasdaq, while advancers held an 8-7 edge over decliners on the NYSE.
Although the Federal Reserve has cut interest rates twice since Jan. 1, many investors remain reluctant to commit to the market because they’re unconvinced earnings will improve any time soon. The Dow, Nasdaq and S&P; sold off Friday on worries about whether Fed policymakers, who don’t meet again until late March, can do enough to halt the nation’s economic slide.
As investors’ concerns about the economy have heightened, they’ve sought the relative safety of blue-chip issues, particularly stocks in sectors like consumer brands, health care and banking. Analysts expect that trading pattern to continue until signs show the economy picking up or until the Fed lowers interest rates a third time.
“The average stock on the New York Stock Exchange has done very well. One out of six stocks made new highs last week,” said Steven Goldman, market strategist for Weeden & Co. “But a lot of the strength is being lost on the tech weakness.”
The so-called safe haven sectors helped boost the Dow again Monday. Philip Morris advanced $1.06 to $46.47 and Coca-Cola rose $1.46 to $59.20.
Oil stocks rallied on Phillips Petroleum’s announcement that it is buying independent oil refiner and gas station operator Tosco in a stock deal worth $7 billion. The Amex oil index rose 1.2% on gains by Exxon Mobil, up $1.81 to $84.80, and Amerada Hess, up $1.47 to $70.96. Phillips lost $4.78 to $53.35, while Tosco jumped $5.58 to $40.19--a 16% gain.
The Amex natural gas index actually rose almost 2%, even though gas futures suffered their largest one-day loss ever in Nymex trading. Anadarko Petroleum rose $1.29 to $61.40 while El Paso Energy was up $2.23 to $65.57.
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Market Roundup, C13-C14
