By AMY BALDWIN
NEW YORK – Unable to put aside their earnings fears for long, investors returned today to a strategy of selling technology stocks and favoring relatively safer blue chips.
The high-tech sector fell on Wall Street’s biggest concern: that high interest rates, an economic slowdown and decreased consumer demand will push profits down further.
The Dow Jones industrial average finished higher, up 42.47 at 10,768.27, according to preliminary calculations.
But the Nasdaq composite index fell 83.21 to 2,931.89, after closing Monday above 3,000 for the first time since Nov. 17. The broader Standard &Poor’s 500 index lost 9.02 to end at 1,371.18.
“Some people feel that 3,000 in the Nasdaq is an important level. So, we are seeing some profit taking,” said Alan Skrainka, chief market strategist for A.G. Edwards &Sons Inc. in St. Louis.
Technology issues rose smartly late last week after Federal Reserve Chairman Alan Greenspan said he was inclined to lower interest rates early next year. High-techs also advanced Monday, but investors are too worried about poor earnings and the election deadlock to extend the rally, analysts said.
“There was some initial euphoria in the wake of Alan Greenspan’s clear message that he is poised to rescue the economy if it heads toward recession, but there are still some concerns especially in the chip sector that earnings will be disappointing,” Skrainka said. “So we are seeing a shift to some of the defensive, more stable stocks.”
Investors awaited a decision expected later in the day from the U.S. Supreme Court on whether to allow Florida to recount its election ballots to determine whether Vice President Al Gore or Texas Gov. George W. Bush will be president.
Wall Street considered the protracted political uncertainty a reason to sell tech stocks and look for deals among blue chips. To a lesser degree, investors recently have used that rationale to do just the opposite.
“This is just more flipping and flopping, day trading, trying to make a buck before the Supreme Court decision,” said Larry Rice, chief investment officer at Josephthal &Co.
Chip makers were mixed after Advanced Micro Devices warned Monday that weak demand for personal computers would lead to lower-than-expected fourth-quarter earnings. AMD inched up 6 cents to $17.25, but Intel, which issued a similar warning last week, slipped 80 cents at $36.64.
Tech losses spread beyond chips.
Covad Communications tumbled 12 percent, or 69 cents, to $2.38 after it lowered its revenue outlook. The company blamed problems at Internet service companies that connect customers to its lines used for high-speed Web access.
Earnings concerns also hampered Dow stalwart General Electric, which fell $2.50 to $52.81. Analysts said they are worried that GE’s acquistion of Honeywell, for which it will take a $4 billion charge, will lower its profits.
The Dow’s gains came largely from so-called defensive stocks. Investors were again looking for safer buys until they see earnings’ outlooks brighten or an end to the election impasse.
Banker J.P. Morgan advanced $1.69 to $158.44, and drug maker Johnson &Johnson rose $1.38 to $97.
Exxon Mobil gained 81 cents to sell at $86.56 after industry economists told the Senate that natural gas and heating oil prices will be high this winter. They cited soaring demand, low inventories and a forecast for colder weather.
Among the most actively traded blue chips, Lucent soared $2, or 12 percent, to $18.69 on rumors it will be bought by Nokia.
The Russell 2000 index fell 9.46 to 477.77.
Declining issues outnumbered advancers 7 to 5 on the New York Stock Exchange, where volume was 1.07 billion shares, down from Monday’s 1.20 billion.
Overseas, markets were also mixed. Japan’s Nikkei stock average rose 0.7 percent and Britain’s FT-SE 100 climbed 0.3 percent. But Germany’s DAX fell 0.7 percent and France’s CAC-40 lost 0.5 percent.
Copyright ©2000 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Talk to us
- You can tell us about news and ask us about our journalism by emailing email@example.com or by calling 425-339-3428.
- If you have an opinion you wish to share for publication, send a letter to the editor to firstname.lastname@example.org or by regular mail to The Daily Herald, Letters, P.O. Box 930, Everett, WA 98206.
- More contact information is here.