Stocks Drop Despite Positive Economic Data
Stocks ended a seesaw session on the downside Thursday as broad market indexes ended their worst month since September.
Positive economic news, including a report showing the U.S. economy grew much faster than expected in the last three months of last year, lifted the market in early trading. Upbeat remarks from manufacturing heavyweights such as General Electric also helped boost the blue-chip sector.
But questions about the strength of the economy’s anticipated comeback, along with persistent jitters about corporate accounting, tempered investors’ enthusiasm. A dull financial forecast from Genesis Microchip and a warning from computer maker Gateway cast a pall over technology stocks.
“Investors are fairly confident that there could be some recovery, certainly in the blue-chip stocks and the traditional economy,” said Rick Meckler, president of investment firm LibertyView. “What is less certain to them is what it means for technology, because the valley in technology seems much deeper.”
The Dow Jones industrial average finished down 21.45 points, or 0.2%, at 10,106.13, after rising as high as 10,238. The broader Standard & Poor’s 500 index slipped 3.16 points, or 0.3%, to 1,106.73. The technology-laden Nasdaq composite index fell 20.39 points, or 1.2%, to 1,731.49.
Winners led losers by 8 to 7 on the New York Stock Exchange, but losers held the upper hand by a 6-to-5 margin on Nasdaq. Volume was moderate.
Nasdaq fell 10.5% in February--its worst monthly loss since a 17% drop in September, when it slumped to three-year lows after the Sept. 11 terrorist attacks. The S&P; 500 lost 2.1%, also its worst monthly loss since September. But the Dow rose 1.9% in February.
The leading indexes dipped after rumors of a possible hijacking of a New York-bound Air India flight, which reawakened memories of the attacks on the World Trade Center and Pentagon. U.S. law enforcement officials later denied there was any fear of a hijacking, and the plane landed safely.
Semiconductor stocks fell after a report late Wednesday showed sales of microchip-making gear tumbled 41% last year, posting a bigger drop than the preliminary statistics released in December.
Chip maker Intel fell $1.34 to $28.55 on Thursday, and the SOX semiconductor index lost more than 3%.
In other tech woes, Genesis Microchip plunged $17.51 to $23.49, or nearly 43%, after the display technology company’s financial forecast showed no boost to results from a recent acquisition. Gateway fell 50 cents to $4.60 after the company warned of a wider-than-expected first-quarter loss.
Software maker PeopleSoft fell $2.77 to $29.07 on reports that the Securities and Exchange Commission may be investigating the company. PeopleSoft said it is unaware of any SEC investigation.
In the Dow, American Express gained 68 cents to $36.45, while Citigroup rose $1.01 to $45.25.
GE, which said it sees stronger 2002 revenue than forecast, rose to a session high of $39.62, but finished off 25 cents at $38.50.
Treasury securities suffered as the day’s economic news induced fixed-income traders to seek corporate bonds. The yield on the benchmark 10-year Treasury note rose to 4.88% from 4.83% on Wednesday.
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Market Roundup, C6-7
