Nasdaq Is Buoyed by Tech Stocks; Blue Chips Falter
Investors gravitated toward technology stocks again Tuesday, sending the Nasdaq composite index higher--albeit modestly--for a sixth straight session, its longest winning streak since February 2000.
Blue chips faltered, however, on a mix of company-specific news, profit-taking and an expected pullback from the big advance that sent the Dow Jones industrial average up 464.95 points, or 4.3%, over the previous four sessions.
“I think the investment public is really falling back in love with technology and telecom, and it’s been a long, long time since that’s been the case,” said Arthur Hogan, chief market analyst at Jefferies & Co. “It’s not surprising though.
“If this economy is going to turn around--and it’s showing signs that it is--the companies that are going to do the best, the fastest are going to be in the technology sector. It’s a market leader.”
The Nasdaq closed up 8.26 points, or 0.4%, at 2,313.85, for a total advance since May 15 of 231.93 points, or 11.1%.
The Dow fell 80.68 points, or 0.7%, to 11,257.24, giving back the gains that on Monday sent it to its highest close since Jan. 20, 2000, when it reached 11,351.30.
The broader Standard & Poor’s 500 index slipped 3.45 points, or 0.3%, to 1,309.38. The loss cut short its own six-day advance of 67.16 points, or 5.4%.
Despite Nasdaq’s advance, technology stocks were mixed.
Gainers included Microsoft, up $1.52 at $70.31, and Cisco Systems, up 61 cents at $23.48. Some other high-profile tech stocks fell, including Oracle, down 55 cents at $17.55.
Blue chips were likewise choppy, reflecting profit-taking from the sector’s big run-up last week. Retailer Home Depot, a member of the Dow industrials, slipped 39 cents to $52.99, while Target was up $1.14 at $38.89 on better-than-expected earnings.
Many stocks on Tuesday made moves based on individual companies’ announcements rather than investors’ overall worries about the economy or weak earnings reports, which have controlled trading activity in recent weeks.
AOL Time Warner rose 64 cents to $57.24 on news its America Online unit was increasing the monthly price of its unlimited use plan for Internet service by about 9% to $23.90.
Investors punished Merck, another Dow component, which dropped $2.30 to $75.10, after a New York Times article questioned the safety of its arthritis treatment Vioxx and also that of Celebrex, an arthritis drug made by Pharmacia and co-marketed by Pfizer. Pharmacia fell 52 cents to $49.50, and Pfizer lost 72 cents to $44.04.
Meanwhile, Houghton Mifflin rose $3.95 to $57.45 amid speculation the money-losing U.S. publisher of textbooks may be bought. Vivendi Universal, Europe’s largest media company, is in talks to buy the Boston-based company for $1.7 billion, the Wall Street Journal reported earlier. Vivendi rose $1.73 to $68.25.
Analysts have been expecting investors, who still have concerns about when corporate profits will improve, to pull back and take profits from the market.
After all, Wall Street has been rallying since early April, primarily in response to the five interest rate cuts by the Federal Reserve this year. Money that was on the sidelines for months while the economy struggled has been coming back into the market, and some retreat was inevitable as investors took profits and adjusted their portfolios.
This week, Wall Street has been concentrating on technology issues--a contrast with last week when blue chips were the focus.
“People are buying the market because they believe the Fed has done enough to block the economic slowdown and restart and re-accelerate growth,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman. “The next few months we may see some seesawing because there’s going to be plenty of negative news in second-quarter pre-announcements.
“But in the end, I think most people will be convinced that with all the Fed easing we’ve had and the possibility of another cut in June, the worst is over.”
The Russell 2000 index of small-company stocks rose 1.32 points, or 0.3%, to 517.23. It has risen 30.59 points, or 6.3%, in the last six sessions.
Declining issues led advancers 15 to 14 on the New York Stock Exchange. Trading was active.
Market Roundup, C6, C7
