Poor Showing by HP Helps Draw Down the Dow
Stocks closed mixed Wednesday as the technology sector weakened after Hewlett-Packard reported lower-than-expected quarterly earnings.
In other markets, Treasury bond yields rebounded. Gold gained on continued fears of more terrorist attacks.
On Wall Street, major indexes traded in a narrow range but couldn’t muster enough support late in the day for a positive close.
The Dow Jones industrial average eased 31.39 points, or 0.3%, to 9,397.51, pulling back from Tuesday’s 14-month high.
The tech-heavy Nasdaq composite, which reached a 16-month high Tuesday, slipped 0.57 point to 1,760.54.
The Standard & Poor’s 500 held above the 1,000 mark but was off 2.05 points, or 0.2%, at 1,000.30.
Hewlett-Packard, one of the 30 Dow stocks, tumbled $2.31, or 10.5%, to $19.80 after reporting disappointing quarterly results late Tuesday. The company said it was “overly aggressive” in pricing its personal computers.
Tech stocks had been resurging over the last week, but “Hewlett put a damper on that,” said Todd Leone, managing director of equity trading at SG Cowen Securities.
Still, HP’s fallout on the rest of the tech sector was relatively limited. Dell Computer fell 54 cents to $32.28 and IBM was off 14 cents to $83.05, while Apple gained 69 cents to $21.01.
Although major indexes were lower, rising stocks outnumbered losers by 16 to 15 on Nasdaq and by 17 to 14 on the New York Stock Exchange.
Many investors remain optimistic that the economy will continue to accelerate in the final months of the year, boosting corporate earnings.
Trust in a strengthening economy also has driven long-term interest rates up sharply since mid-June, as investors bet on rising demand for money.
Alfred Broaddus, president of the Federal Reserve Bank of Richmond, told CNBC on Wednesday that the economy has a “good chance” of growing at a 4% real rate through 2004.
Broaddus also downplayed the Fed’s comments in May about the threat of deflation, which had helped drive bond yields to generational lows by mid-June.
Treasury bond prices weakened Wednesday, pushing yields up. The 10-year T-note ended at 4.44%, up from 4.36% on Tuesday.
In other trading, near-term gold futures rose for a second day in New York as the terrorist bombings Tuesday in Baghdad and Jerusalem sparked buying by investors in the Middle East seeking a haven for their assets.
Gold gained $4 to $365.60 an ounce. The metal’s peak this year was $379, reached Feb. 4.
In foreign trading, Japan’s Nikkei 225 stock index rose nearly 118 points, or 1.2%, to a 52-week high of 10,292.06, even as government bond yields rocketed.
Among Wednesday’s market highlights:
* Gold stocks surged. Barrick Gold jumped 86 cents to $19.78, Agnico Eagle rose 48 cents to $14.23, and Newmont Mining was up 67 cents to $39.58.
* Semiconductor stocks were lower after rising briskly in recent days. Intel was off 11 cents to $26.36, Broadcom lost 62 cents to $24.73, and National Semiconductor eased 31 cents to $26.42.
* LeapFrog Enterprises, an Emeryville, Calif., maker of electronic educational toys, jumped $2.40 to $34.01 as it rolled out its new product line.
* In the retail sector, Men’s Wearhouse rose 47 cents to $27.39, a 52-week high, after the company said quarterly earnings rose 53%.
* Petco Animal Supplies climbed $3.41 to $27.94 after the company reported stronger-than-expected quarterly earnings. Rival Petsmart jumped $1.10 to $20.68.
* The dollar continued to gain against the euro, which fell to $1.112 in New York, a four-month low.
Market Roundup, C4-5
