Stocks Close Mostly Lower in Volatile Session; Gold Rises
Wall Street stumbled through a volatile session Tuesday and closed mostly lower, though the losses were small compared with Monday’s dive.
Some battered tech stocks got a lift, but weakness in drug, retail, financial and airline stocks depressed the broad market.
In other trading, gold prices advanced to fresh 4 1/2-year highs, while the dollar strengthened.
On Wall Street the Dow industrials lost 21.95 points, or 0.2%, to 9,687.84, but had been down as much as 117 points.
The Nasdaq composite gained 15.56 points, or 1%, to 1,578.12.
Key indexes had tumbled Monday, depressed in part by new allegations of scandal in the executive suites of major companies. The Dow slumped 215 points. Nasdaq slid 53 points.
On Tuesday, some investors took advantage of recent declines to snap up bargains. But losers still outnumbered winners by 8 to 7 on the New York Stock Exchange and by 19 to 16 on Nasdaq in active trading.
The Dow’s close was its lowest since Feb. 7.
News of possible trading abuses at leading Nasdaq dealer Knight Trading Group undercut investor confidence. The revelations came a day after the chief executive of conglomerate Tyco International quit amid allegations he did not pay state taxes on art purchases. Tyco CEO L. Dennis Kozlowski was formally charged Tuesday.
“It’s like a perfect storm in stocks,” said Philip Ruffat, senior vice president at Mizuho Securities USA. “You have fraud and deceit in accounting, and you have high [stock] valuations.”
Analysts noted that the continuing threat of a nuclear conflict between India and Pakistan also is weighing on sentiment. That same concern is helping gold: Near-term gold futures in New York rose $1.10 to $327.80 an ounce, highest since October 1997.
The latest comments from U.S. Federal Reserve Chairman Alan Greenspan sent stocks lower in late trading after he qualified a statement that an upswing in inventory investment by businesses was stimulating production. Greenspan said inventory rebuilding was “a one-shot affair ... and the question is: ‘Will final demand hold up continued growth?’”
In foreign trading, European markets were sharply lower on the heels of Monday’s U.S. stock decline. The German market plunged 2.6%, the French market lost 3.8% and the Swiss market slid 2.1%.
In currency trading, the dollar recovered a bit after its steep recent losses against the euro and the yen.
Among Tuesday’s highlights:
* Tech shares getting a lift included Cisco Systems, up 75 cents to $16.08; IBM, up $1.20 to $79.31; and Intel, up 88 cents to $27.50.
But contract manufacturer Flextronics International skidded $2.43, or almost 20%, to $9.89. The company warned it would miss Wall Street earnings and revenue estimates this quarter because of still-depressed technology spending.
* In the telecom sector, Qwest Communications fell 2 cents to $5.08 after eliminating its quarterly cash dividend to save money. Also, Nortel Networks sank 28 cents to $1.80 after the company said it plans to raise $800 million by issuing new shares.
* Airline shares continued to slide on worries about industry losses. Continental fell $1.54 to $19.51 and Northwest dropped 75 cents to $15.18.
* In the drug sector, Novartis lost 62 cents to $41.83, Lilly fell $1.89 to $62.06 and Pharmacia gave up $1.11 to $40.40.
* AOL Time Warner dropped 89 cents, or 5%, to $17.20 after Lehman Bros. analyst Holly Becker cut her sales and earnings outlook for the company in 2002, saying the online advertising slump may last longer than anticipated. She now forecasts cash flow of $9.6 billion, down from $9.7 billion.
* Shares of Plumtree Software, which makes Internet infrastructure software, closed unchanged at $8.50 on their first day of trading. The company sold five million shares at that price Monday.
Market Roundup, C6-7
