Technology Stocks Continue to Tumble
Technology stocks extended their decline Thursday as investors locked in gains after disappointing results from Computer Associates. Drug shares, hit hard the previous session, rebounded on strong earnings from Eli Lilly and Bristol-Myers Squibb.
Analysts said investors were being mostly cautious after sending the market’s major indexes to 52-week highs last week. Many wanted to see not only solid earnings but also better-than-expected revenue and outlooks before making major stock purchases.
“The earnings numbers are pretty good, but the large run-up in stocks this year discounts a lot of that,” said John Caldwell, chief equity strategist for McDonald Financial Group. “The bottom line is the market still looks relatively expensive.”
A sharp sell-off in Japan also pressured U.S. shares. Stocks slid 5.1% in Tokyo on the U.S. dollar’s weakness against the yen as well as Wall Street’s recent declines on earnings disappointments. It was Japan’s biggest single-day decline since Sept. 12, 2001, the day after the terrorist attacks.
There was little follow-through in Europe to the Asian route, however. Share indexes in France and Britain lost about 1% each, and stocks rose in Germany. Stocks were up in Japan in early trading today.
The tech-laden Nasdaq composite index dropped 12.56 points, or 0.7%, to 1,885.51, after a decline of 42.83 points Wednesday. Blue-chip shares finished modestly higher. The Dow Jones industrial average closed up 14.89 points, or 0.2%, at 9,613.13, after a two-day loss of nearly 180 points. The Standard & Poor’s 500 index rose 3.41 points, or 0.3%, to 1,033.77.
Losers led winners by almost 7 to 6 on the New York Stock Exchange and by about 9 to 7 on Nasdaq in heavy trading.
Wall Street got good news on the economy before the open Thursday when the government said the number of Americans filing new claims for jobless benefits fell 4,000 to 386,000 last week, suggesting the labor market was inching slowly back toward health.
Drug shares were among the winners after heavy losses Wednesday. Eli Lilly rose $4.32 to $65.10 after reporting profit that met estimates. And Bristol-Myers Squibb gained 85 cents to $25.10 after notching a doubling of third-quarter profit that beat analysts’ expectations.
On the downside, Computer Associates slid $2.13 to $23.02. The business software company posted a wider quarterly net loss because of litigation settlement charges and said its auditor was unable to complete a review of its results because of an internal probe.
After the close of regular trading, Microsoft fell despite posting a higher quarterly profit and raising its outlook for computer demand. Shares fell to $27.54 in after-hours trading after rising 2 cents to $28.91.
Bond yields rose for the first time in five sessions on the jobs report. The yield on the benchmark 10-year Treasury note climbed to 4.32% from Wednesday’s close of 4.25%.
In other highlights:
* KLA-Tencor sank $4.56 to $53.49. The company disappointed investors with its growth rate for new orders and a prediction that results for the current quarter would come in below Wall Street’s targets.
* Among the Dow stocks, the best performers included shares of Citigroup, the world’s largest financial services company, up 58 cents at $47.78 -- three days after the company reported a record quarterly profit. American Express shares rose 59 cents, or 1.3%, to $47.63, topping the percentage gainers in the Dow.
