Economic Data Boost Dow; Tech Slides on Debt Fears
Technology stocks slid Thursday on fears about mounting debt in the telecom sector and more accounting blowups, but upbeat economic data lifted the Dow Jones industrial average over the key 10,000 mark for the first time in five weeks.
“The market’s still a little bit on the timid side when they see all these big players in the telecommunications side running into problems, and that’s going to trickle down into the broader market,” said Keith Janecek of Legg Mason Wood Walker.
Qwest International, the No. 4 U.S. local phone company, reignited market concerns about ballooning corporate bankruptcies after it was forced to dig into its backup credit line and had its debt downgraded by Standard & Poor’s. Its shares fell $1.10 to $7.49, a 52-week low.
Accounting concerns also were still gnawing at the market after a string of scandals.
“Investors are legitimately concerned about seeing a stock they own be worth half its current price in a short period of time,” said Rick Meckler, president of investment firm LibertyView. “They’re often not waiting around to see if this really is in the category of Enron or if it’s really not. “
The Dow industrials gained 12.32 points, or 0.1%, to 10,001.99, closing above 10,000 for the first time since Jan. 10.
The Standard & Poor’s 500 index slipped 2.03 points, or 0.2%, to 1,116.48, and the Nasdaq composite index dropped 15.79 points, or 0.9%, to 1,843.37.
Losers led winners by 3 to 2 on Nasdaq and were about even on the New York Stock Exchange. Trading was moderate in advance of today’s options expiration session. The market will be closed Monday for Presidents Day.
Stocks rose at the opening after the Labor Department said initial jobless claims fell last week, totaling less than 400,000 for a sixth week, a sign that U.S. payrolls are as lean as they will get. In addition, the Commerce Department reported that business inventories fell in December to their lowest level in two years.
But the gains evaporated after S&P; downgraded Qwest’s debt about two hours before the market closed.
Conglomerate Tyco International and data storage company EMC were among those caught in the cross-fire as investors questioned the honesty of corporate America’s financial statements in the wake of the collapse of Enron.
Tyco fell $2.15 to $26.75 amid lingering uncertainty over its breakup plan announced last month, just a day after it issued a profit warning. EMC lost 59 cents to $13.90 as the No. 1 maker of data storage systems was hit by concerns that it improperly booked revenue with some customers.
In other market highlights:
* Gap shares fell 55 cents to $12.79 after S&P; cut its credit ratings to “junk” status, saying the largest U.S. apparel retailer has suffered from disappointing earnings and sales in a weak economy and a poor retail environment.
* Juniper Networks fell $2.09 to $10.92, and rival Cisco Systems sagged 6 cents to $17.46. Cisco, the world’s No. 1 maker of gear used to manage Internet traffic, extended its share of the market during the fourth quarter over Juniper, according to Dell’Oro Group.
* PayPal sold 5.4 million shares at $13, raising $70.2 million in an initial stock offering that was delayed a week by a lawsuit. The online payment provider will begin trading today on Nasdaq under the symbol PYPL.
* Brocade Communications fell $2.56 to $32.64. The company reported weaker quarterly results amid slumping demand for storage networking equipment.
* Qwest led telecom stocks lower. The Amex telecom index fell 2.8% to a 52-week low. Other losers included Sprint PCS, down $1.42 to $10.20, and Nextel Communications, off 17 cents to $4.85.
* Incyte Genomics Inc. shares fell $3.07 to $11.91 after the company said its fourth-quarter loss widened because of restructuring and acquisition costs and a decline in revenue.
Market Roundup, C5-6
