Blue Chips Rise; Tech Stocks Fall
Blue-chip stocks scraped out modest gains Friday as U.S.-led forces closed in on Baghdad, but technology shares slumped under the weight of earnings warnings from companies such as software maker PeopleSoft.
U.S. troops seized Baghdad’s international airport Friday, but the Iraqi government threatened to strike back with “nonconventional” means and the U.S. military said it would take time to get a grip on the city.
In addition, a televised address by Saddam Hussein kept investors on edge. It appeared to be the first clear evidence that he had survived a bombing raid on the first night of the war aimed at killing him.
The blue-chip Dow Jones industrial average rose 36.77 points, or 0.5%, to 8,277.15. The broader Standard & Poor’s 500 index edged up 2.40 points, or 0.3%, to 878.85. The technology-heavy Nasdaq composite index fell 13.07 points, or 0.9%, to 1,383.51.
Winners beat losers by 6 to 5 on the New York Stock Exchange, but losers held a 9-to-7 edge on Nasdaq. Trading was moderate.
For the week, the Dow finished up 1.6%, the S&P; added almost 1.8% and Nasdaq rose 1%, recouping some of last week’s sharp losses.
There was additional evidence Friday that the war is hitting corporate profits and the U.S. economy. The government reported a worse-than-expected drop in nonfarm payrolls in March as the conflict affected hiring, although the unemployment rate held steady at 5.8%.
PeopleSoft ranked among the most active shares on Nasdaq and skidded $1.48 to $15.02. After regular trading ended Thursday, the company warned that its first-quarter earnings and revenue would fall short of estimates as the war in Iraq hit an already weakened economy.
PeopleSoft dragged other business software makers lower. Germany’s SAP slumped 61 cents to $19.95 in U.S. trading, and Siebel Systems fell 41 cents to $7.75.
But yields on longer-term Treasury securities inched up as investors bet on a U.S. victory in Iraq and a subsequent pickup in economic activity in the U.S. The yield on the benchmark 10-year T-note rose to 3.95% from Thursday’s close of 3.91%.
In New York commodities trading, oil futures fell 35 cents to $28.62 a barrel and gold rose 40 cents to $325.30 an ounce.
In other highlights:
* Semiconductor stocks were under pressure after Europe’s biggest chipmaker, STMicroelectronics, issued disappointing results. STM’s U.S.-traded shares declined 97 cents to $18.76.
The SOX index of chip stocks lost 2.5%. Wireless chip maker Texas Instruments sank 85 cents to $16.90. Intel fell 52 cents to $17.05.
* Alcoa, the world’s biggest aluminum maker, rose 13 cents to $20.04 in advance of its quarterly results due after the bell. The company, the first Dow component of the season to report earnings, said first-quarter results decreased because of higher energy costs, although its shares rose in after-hours trading. The quarterly earnings season kicks into high gear in mid-April.
* Altria Group ranked as the Dow’s biggest loser, falling $1.40 to $28.30. Fitch Ratings cut the ratings of Altria and its units Thursday, citing the increased risk of litigation and losses facing the industry as a result of an Illinois court judgment against cigarette maker Philip Morris USA, now part of Altria.
Market Roundup, C4-5
