Dow Peeks Fleetingly Above 11,000
In another meandering session on Wall Street, technology stocks recovered from a two-day losing streak Tuesday to post a modest gain, but the Dow Jones industrial average once again failed to close above the 11,000 benchmark.
“The underlying premise is that the economy is going to be a lot better in the second half because of the [Federal Reserve] easing,” said Alfred Kugel, senior investment strategist at Stein Roe & Farnham. “Therefore, you don’t want to be too negative on technology, but try to pick your spot.”
The Dow slipped 8.43 points, or 0.1%, to 10,957.42, after rallying early in the day above the 11,000 mark. The index has poked above that watermark several times in the last few months but has not closed above it since mid-September.
The technology-laden Nasdaq composite index rose 21.28 points, or 0.8%, to 2,664.49, after climbing more than 2% earlier in the day.
The possibility that the Dow could break out of its trading range had given a boost to Nasdaq, noted Barry Hyman of Weatherly Securities.
“There is a correspondent spillover effect, in terms of the effect of how interest rates going lower can help the economy and growth stocks,” Hyman said. “I think it is very important that the Dow closes above 11,000 to give us that technical break in the market to the upside.”
The broader Standard & Poor’s 500 index shed 2.05 points, or 0.2%, to 1,352.26.
Advancers led decliners by 10 to 9 on Nasdaq and by 17 to 14 on the New York Stock Exchange. Trading was slow on both markets, which have seen volume dry up in recent days as investors hedged their bets while they try to get a read on the condition of the U.S. economy.
On Tuesday, bargain hunters bought shares of beaten-down computer chip companies such as Intel, up 75 cents to $35.44, and PC makers such as Dell Computer, which rose $2.44 to $26.88.
After trading ended, however, tech bellwether Cisco Systems reported a 48% jump in quarterly profit, but still missed analysts’ sales and earnings estimates.
Cisco, the most active Nasdaq issue, gained $1.19 to $35.75 during the regular market session but fell to $33.56 in after-hours trading following its report.
One of the most heavily traded tech stocks was JDS Uniphase. The fiber-optics maker got the green light from U.S. regulators for its $18.3-billion acquisition of SDL after agreeing to sell a key laser plant to Nortel Networks for as much as $3 billion.
JDS shares rose $1.81 to $51.81 and SDL leaped $11.13 to $196.50 on Nasdaq, while Nortel, the world’s No. 1 supplier of fiber-optic system equipment, was off 25 cents at $35.51.
The broader tech rally didn’t help Applied Micro Circuits, whose shares plummeted $9.31 to $55.06. The communications chip maker said late Monday it has suffered order cancellations.
Among Dow stocks, Walt Disney climbed $1.18 to $31.61 after reporting better-than-expected results. And diversified manufacturer 3M added a gain of $1.89 to $111.66.
Bank stocks were broadly lower. Bank of America fell $2.30 to $50.96, Citigroup lost $1.17 to $55.13, Comerica eased 94 cents to $59.30 and First Union was off $1 to $32.30.
The Amex biotech index gained almost 4% on good news in the sector. Affymetrix jumped $6.63 to $68.06 after reporting a narrower-than-expected loss, and Immunomedics gained $1.69 to $16.69 after receiving a patent extension. Amgen rose $1.56 to $69.88.
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Market Roundup, C7-8
