Stocks Finish Lower Despite Bargain Hunting in Last Hour
Bargain hunters saved the market from another big tech sell-off Monday, rescuing the Dow Jones industrials and the Nasdaq composite index from losses of more than 100 points each in the last hour of trading.
Major indexes still finished lower, as Wall Street waits to see how much of a negative effect the slowing economy has had on corporate earnings.
The Dow closed down 40.66 points, or 0.4%, at 10,621.35. Nasdaq fell 11.73 points, or 0.5%, to 2,395.92 and the Standard & Poor’s 500 index ended down 2.49 points, or 0.2%, at 1,295.86.
Discounted prices prompted investors to do some last-minute buying Monday.
“Looks like the sellers ran out of gas,” said Arthur Hogan, chief market analyst for Jefferies & Co. “It’s hard to say who flipped on the ‘buy’ sign . . . but we’ll take it.”
In Nasdaq’s case, the rally began after the index dipped below 2,300. The market closed below that level Jan. 2 for the first time since March 1999.
With stocks continuing their slide despite last week’s interest rate cut by the Federal Reserve, investors were anxiously looking for a bottom. Nasdaq has already lost 3% this year, following last year’s painful 39% slide.
Hogan said the market might be close to turning around, and theorized that upcoming earnings reports might not be as bad as expected, which could mean a rally in deeply depressed stocks.
Since the new year began, the market has continued to fall on Wall Street’s fears about waning profits and the slowing economy. The one exception was Wednesday, when the Dow and Nasdaq soared more than 300 points each after the Fed’s rate cut. But investors resumed selling as it sank in that it will take time for earnings and the economy to benefit from lower interest rates.
Still, stocks might rally if upcoming earnings beat analysts’ expectations or if the market can shake off disappointing results, said Ricky Harrington, technical analyst for Wachovia Securities in Charlotte, N.C.
After nearly five months on a downturn, “that could be a key change in character in the market,” Harrington said.
The first big day of tech earnings comes Wednesday when Yahoo and Motorola are due to report results. On Monday, investors seemed guarded, sending Yahoo skidding $1.31 to $27.19. But Motorola, which had fallen earlier, closed up 56 cents at $21.75.
Before turning into bargain hunters, investors directed their ire at technology in general, because the sector stands to have the weakest profits.
Dell Computer recovered late in the day, picking up 13 cents to close at $19.13. Earlier, Bear Stearns lowered its earnings estimates for the company. IBM, a Dow stock, fell 44 cents to $93.56 after losing more than $2 earlier in the session.
Companies that supply the PC industry also were hurt, but rebounded somewhat. Microsoft lost 19 cents to finish at $48.94, while Intel was down 13 cents at $31.94. Both are Dow components.
Blue-chip advances were spread across sectors with no clear leader. Coca-Cola rose 94 cents to $58.63, and Procter & Gamble climbed $1.63 to $76.56. P&G; issued a profit warning after regular trading ended.
Alcoa, another Dow component, rose 50 cents to $33.63 after posting better-than-expected earnings. And Philip Morris, the industrial average’s best-performing stock last year, jumped $1.94 to $42.06 as investors sought out so-called defensive stocks, which tend to perform well even during an economic slowdown.
But shares of retailers, many of which reported they had the bleakest holiday shopping season in years, were down. Best Buy fell sharply, down $2.38 at $37.56, and Abercrombie & Fitch slid $1.75 to $20.56.
Advancing issues outnumbered decliners 13 to 11 on the New York Stock Exchange, where trading was active. Losers held an 11-8 edge over winners on Nasdaq, where 1.8 billion shares changed hands.
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Market Roundup, C14-15
