Nasdaq’s Gains Reduced by Late-Session Jitters
Investors went on a technology buying spree Wednesday but retreated on second thoughts about the stock market’s actual strength in a decelerating economy.
The Nasdaq composite index closed up 64.23 points, or 2.5%, at 2,682.78, after giving back more than half its gains from early in the day and failing to maintain a foothold above 2,700--considered a key support level by market analysts.
The Dow Jones industrial average fell 68.32 points, or 0.6%, to 10,584.34, despite rising earlier in the session. The broader Standard & Poor’s 500 index rose 2.82 points, or 0.2%, to 1,329.47.
After months of worrying about how moderating economic growth would affect corporate profits, investors had a mixed reaction when some of those reports were actually released. Early in the session, they appeared to shrug off a handful of gloomy forecasts, but by late in the day, the jitters returned.
Technology rose on better-than-expected results from companies such as Juniper Networks, which rose 6%, up $8.19 to $136.19.
Sector bellwether Intel slipped 88 cents to $30.50 after initially rising on an earnings report that met expectations but also forecast a 15% revenue drop for the next quarter. Analysts said the report wasn’t as bad as investors feared but not good enough to keep the stock up.
Worries about earnings also weighed on the Dow, where 3M lost $3.50 to $110. Aircraft manufacturer Boeing slid $2.25 to $58.75 after beating Wall Street estimates but reporting a 27% decline in quarterly net income due to several one-time charges. Pharmaceuticals also pulled the Dow lower as investors took profits. Merck slipped $2.06 to $81.25 and Johnson & Johnson fell $2.50 to $91.69.
The Dow got a boost from IBM, which gained $3.94 to $96.69 during regular trading. The stock rose to $102 in after-hours trading after it reported solid fourth-quarter earnings and said it expects to meet 2001 profit forecasts.
Analysts were cheered that investors didn’t respond to weak earnings with massive sell-offs.
“Perhaps we’re getting to the time when for most companies, excluding some technology stocks, the bad news seems to be built into the stock price,” said James Meyer, director of research at Janney Montgomery Scott. “But that doesn’t mean we’re going to have a bull market.”
Wall Street’s hopes for another interest rate cut got a possible boost from government reports showing a moderate gain in consumer prices and a decline in U.S. factory orders in December.
Advancing issues outpaced decliners 16 to 13 on the New York Stock Exchange, where volume was heavy. Winners beat losers by 3 to 2 on Nasdaq, where 2.8 billion shares changed hands.
Among Wednesday’s highlights:
* The dollar soared against the euro and yen as the U.S. economic data were interpreted as showing little inflationary pressures and as Treasury Secretary-designate Paul O’Neill voiced his support for a “strong dollar.”
The dollar, which has been pressured recently by increasing fears of a sharp economic downturn in the United States, rose 1.39 yen to 118.90 yen. The euro’s value against the dollar fell from 94.1 cents to 93.4 cents.
* Juniper Networks’ earnings report sparked a rally among networking- and chip-related issues. The Philadelphia semiconductor index jumped 6.3% as Applied Materials gained $3.75 to $48.19, Linear Technology added $7.56 to $60.50 and KLA-Tencor rose $3.19 to $40.38. The Amex networking index climbed 4.7%, led by Juniper and Nortel Networks, which rose $2.81 to $34.75.
* Crude oil and natural gas prices sank, even as OPEC said it would cut oil production. Exxon Mobil fell $1.56 to $80.25, Smith International lost $3.75 to $72.63 and Nabors Industries fell $2.79 to $57.75.
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Market Roundup, C7-8
