Technology Stocks Slump, but Blue Chips Hold Higher Ground
An upbeat outlook from 3M and lower stock prices brought tentative buyers to Wall Street on Friday and gave blue chips a moderate boost. But investors again traded cautiously in the tech sector, sending shares down on a rumor of a profit warning from IBM.
The Dow closed up 36.47 points, or 0.4%, at 10,271.64. Friday was the Dow’s second straight winning day following a four-session, 228-point losing streak. However, the Dow closed down 1.3% for the week--the average’s third consecutive weekly decline.
The market’s broader indexes finished both Friday and the week lower. The tech-dominated Nasdaq composite index fell 19.72 points, or 1.1%, to 1,770.03, ending the week with a loss of 4.1%. The Nasdaq has fallen four weeks in a row and eight of the last 10.
The Standard & Poor’s 500 index declined 3.61 points, or 0.3%, to 1,122.73. For the week, the S&P; fell 2.2%.
Volume continued to be unusually light, with the New York Stock Exchange having one of its slowest days of the year. Winners outnumbered losers by 3 to 2 on the Big Board. On Nasdaq, six stocks fell for every five that rose.
There was no profit warning from IBM after the market closed, although the company announced an unspecified number of layoffs.
Also Salomon Smith Barney downgraded shares of IBM on a technical basis Friday afternoon because the stock price slipped below $100.
IBM’s sharp decline--it lost $3.59 to $97.25--illustrated investors’ jitters over the health of corporate earnings.
Investors’ nervousness increased as tensions rose in the Mideast, sparking fears of higher oil prices that would threaten the economic recovery. Prudential Securities analyst Larry Wachtel suspected Mideast worries were the biggest factor in Friday’s session.
“Basically, it is a defensive day ahead of a weekend when anything can happen in the Middle East,” Wachtel said.
The Dow’s biggest gainer was 3M, which soared $7.81 to $121.93 after saying its first-quarter profit will beat analysts’ expectations. Also, Salomon Smith Barney and Credit Suisse First Boston each raised their ratings on 3M.
The beleaguered technology sector, pegged by analysts to be the last to eventually emerge from recession, declined again. Other tech losers included Microsoft, down 58 cents at $55.87, and Intel, which declined 54 cents to $30.05.
A mildly disappointing jobless report had little effect on the session.
Bond yields fell for a fourth day as the jobs report dampened fears of an imminent Federal Reserve rate hike. The yield on the benchmark 10-year Treasury note fell to 5.21% from 5.26% on Thursday. It closed at 5.43% on Monday.
In other highlights Friday:
* Oil prices fell for a third day as President Bush sought an Israeli withdrawal from Palestinian-controlled territory. Crude for May delivery fell 37 cents to $26.21 a barrel in New York--although it recovered from an earlier decline of $1.53 a barrel. There is mounting skepticism that Middle East oil producers will be able to organize an embargo as a show of support for the Palestinians in their fight against Israel.
* Oil stocks retreated in lock step with the pullback in oil prices. The Philadelphia oil services index fell 1%, reflecting losses by firms such as Schlumberger, off $1.65 to $54.39. ExxonMobil lost 52 cents to $42.63 and Phillips Petroleum fell $1.21 to $60.64.
* Adelphia Communications Corp. rose 42 cents to $10.42 on news it has hired banks to advise on possible asset sales to help pay down debt.* Enterasys Networks fell $2.80, or 68%, to $1.34 after three top executives resigned because sales have plunged in the last two quarters.
Market Roundup, C4-5
