Dow Edges Up as Techs Slide Again
Technology stocks fell for a second straight session Tuesday as investors, dubious about prospects for a fast turnaround for many tech firms, cashed in profits from the market’s spring rally.
Blue chips fared better, but trading overall was subdued, with many investors apparently taking an extended holiday.
In the bond market, yields continued to edge higher.
On Wall Street, the Nasdaq composite index slid 75.49 points, or 3.4%, to 2,175.54, closing near its low for the day.
The Dow Jones industrial average edged up 33.77 points, or 0.3%, to 11,039.14. But most stock indexes closed modestly lower.
Losers topped winners by nearly 2 to 1 on Nasdaq, but losers had only a 17-14 edge on the New York Stock Exchange.
Nasdaq has fallen nearly 6% since reaching 2,313 on May 22, which was its highest since February.
Tech stocks were weighed down Tuesday after brokerage Goldman Sachs cut earnings estimates for EMC and Sun Microsystems early in the day. After the market closed, Sun warned of weaker-than-expected earnings in the current quarter, citing slow sales in the United States and in Europe.
Sun slid $1.80 to $18.67 in regular Nasdaq trading, then fell to $17.98 in after-hours trading.
“The truth of the matter is you’re not going to see any positive signs [from key companies] for another three or four months,” as the economy continues to struggle, said Charles White, portfolio manager at Avatar Associates.
The market also reacted badly Tuesday to expectations of a merger between Alcatel and Lucent Technologies. After trading ended, the companies said they called off their merger talks.
Apart from technology, however, some shares seemed to get a lift from government data suggesting that consumer spending might remain relatively strong.
The Commerce Department said consumer spending rose 0.4% in April, its biggest increase since January. Separately, the Conference Board said its consumer-confidence index rose to 115.5 in May from 109.9 in April.
Some analysts said the stock market’s pullback in recent days is healthy. “I think this is just a pause that will refresh later on for the market,” said Steven Goldman, equity strategist at Weeden & Co. “The overall market is holding up quite well.”
But bonds remain a concern: Long-term Treasury yields rose again Tuesday on fears that stronger consumer sentiment might mean the Federal Reserve will end its credit-easing campaign sooner than later.
The 10-year T-note yield edged up to 5.52%, up from 5.51% on Friday and a six-month high.
Bond traders are awaiting the May employment report, which the government will release Friday.
Among Tuesday’s highlights:
* Tech shares off sharply included EMC, down $3.11 to $33.99; Micron Technology, down $2.72 to $37.98; Intel, down $1.25 to $27.85; and Juniper Networks, down $5.77 to $46.39.
* Blue chips lifting the Dow included Procter & Gamble, up $1.14 to $64.64; Eastman Kodak, up $1.67 to $48.82; and Merck, up $1.79 to $74.39. The shares might have been helped by the consumer-confidence report, analysts said.
Some industrial issues also rallied. Caterpillar gained $1.14 to $55.14 and Nucor rose $1.35 to $52.85.
* Energy stocks were mixed. News of a merger between Conoco and Gulf Canada Resources might have been offset by slumping natural gas prices. Exxon Mobil eased 30 cents to $87.80, and Apache fell $1.24 to $58.25.
* In currency trading, the euro ended at 85.6 cents in New York, down from 86 cents in Europe on Monday. The euro has been sliding in recent weeks on concerns about slowing growth on the Continent.
Market Roundup: C6, C7
