Stocks Bounce Back in Late Going
U.S. stocks staged a dramatic late-day comeback on Tuesday, erasing steep losses as investors snapped up shares beaten down by a bleak profit forecast from Nokia.
Finland’s Nokia, the world’s No. 1 mobile phone company, jolted Wall Street early in the session, predicting only “very modest” market growth for the full year amid weak global conditions. The warning drove the Nasdaq composite index down as much as 3%, but heavy buying in the last hour of trading almost carried the tech-focused index into positive territory.
“There was a negative consensus out there with Nokia and other downgrades and so we got to levels that were compelling to investors,” said Jim Herrick, managing director in charge of listed trading at Robert W. Baird & Co. “There was bargain hunting coming in.”
The blue-chip Dow Jones industrial average finished up 26.29 points, or 0.2%, at 10,948.38, after dropping more than 1% during the session.
The Nasdaq ended down less than a point at 2,169.95, after tumbling as much as 65 points early in the session. The broad Standard & Poor’s 500 index rose 1.46 points, or 0.1%, to 1,255.85.
Nokia, the most active stock on the New York Stock Exchange, fell $5.45 to $23.26 and put a drag on other mobile phone makers. Swedish rival Ericsson, one of the most actively traded issues on Nasdaq, fell 20 cents to $5.30, while U.S.-based Motorola lost 86 cents to $14.
The downbeat comments also put a damper on companies that supply parts to mobile phones. Texas Instruments, the world’s No. 1 maker of computer chips used in mobile phones, dropped $1.91 to $34.90. RF MicroDevices, which makes radio-frequency products used in cell phones, fell 61 cents to $25.80.
Trading volume was light but more active than in recent days as investors kept on the sidelines during the peak of the confessional season when companies warn quarterly results will miss Wall Street’s estimates.
On Nasdaq, five stocks fell for every four that rose. On the NYSE, winners and losers were about even.
Dow component General Electric reversed early losses and ended $1.37 higher at $48.77. A source said European antitrust regulators have considered asking GE to sell a large part of Honeywell International’s aerospace operations before they approve a $42-billion merger deal. Honeywell, also a Dow component, slid $1.78 to $43.47.
Dell Computer nosed up 84 cents to $26.10 after Wall Street house Morgan Stanley hiked its investment rating on the personal computer giant. PC maker Compaq Computer rose 12 cents to $15.57 and Hewlett-Packard gained 50 cents to $28.30.
El Segundo-based Hughes Electronics, a unit of General Motors, fell $2.70 to $19.90 after the company said it saw sales growth for fiscal 2001 at the lower end of its previous forecast. It also warned that new subscribers to its DirecTV satellite service would fall sharply below prior estimates in its fiscal second quarter. GM rose 25 cents to $59.39.
Santa Clara-based Affymetrix lost 36% of its value after the genetic technology company warned of a shortfall in its second-quarter revenue. It fell $14.94 to $26.01.
Another warning came from R.R. Donnelley & Sons, the world’s third-largest commercial printer, which said it was lowering forecasts for 2001 earnings because of weaker demand for its services. Its shares lost $1.78 to $29.04.
In other market action:
* Japan’s Nikkei 225 stock average slumped 3% to a nine-week low, falling 386.38 points to 12,840.10. Shares of chip makers and banks fell on further evidence that the Japanese economy is still shaky.
* U.S. Treasuries rose on speculation that further declines in corporate profits will induce the Federal Reserve to cut interest rates at least twice more this year. The yield on the two-year Treasury note, which moves opposite to its price, fell from Monday’s close of 4.09% to 4.06%--its lowest close since October 1998. The yield on the benchmark 10-year Treasury note fell to 5.25% from 5.29% Monday.
Market Roundup, C7, C8
