Posted at 12:15 p.m., Tuesday, August 7, 2001
Technology shares fall while blue chips climb
• Hawai'i Stocks
• Updated AP Market Chart
Associated Press
NEW YORK — Wall Street traded tentatively today, with investors bidding blue chips moderately higher but selling technology issues on another string of semiconductor downgrades.
Analysts say caution, evidenced by light volume and a narrow trading range, will continue to rule the stock market until companies can tell investors what they want to hear: Business is getting better.
The Dow Jones industrial average rose 57.43 to 10,458.74, according to preliminary calculations. The Dow, which traded in a 113-point range, won back more than half of the 111 it lost yesterday.
The broader market was mixed. The Nasdaq composite index, which traded in a 30-point range, fell 6.48 to 2,027.78. The Standard & Poor's 500 index rose 3.92 to 1,204.40.
Tech traders were cautious ahead of Cisco's earnings, due out at the end of today's session. Cisco, the heaviest-traded Nasdaq stock today, fell 28 cents to $19.26.
Investors who have been yearning for concrete proof that business is improving half-heartedly welcomed a report that American workers' productivity rebounded in the second quarter for its best showing in a year.
"Productivity helped. But can you go the distance? That's what Wall Street is asking," said Larry Wachtel, market analyst at Prudential Securities.
Wachtel noted that recent economic data has been mixed, challenging the market to keep any gains, and that thousands of layoffs in July contributed greatly to the rise in productivity.
As long as the economic outlook is murky, the stock market will continue to narrowly fluctuate, analysts said.
"There is nothing that is going to happen in the month of August that is going to grab you by the lapels and say, 'This is it,' " Wachtel said.
The tech sector came under pressure after Credit Suisse First Boston downgraded a handful of semiconductor stocks, saying that companies will continue to work off excess inventory through next year and that demand will remain low. Novellus Systems dropped $2.47 to $49.81 and Applied Materials fell $1.93 to $46.80.
"We believe valuations have gotten ahead of fundamentals, and investors should take profits," said CSFB in a research note.
Today was the third straight day of weakness in the tech sector.
Yesterday, downgrades of Intel and a warning that the chip maker will slash prices on its Pentium 4 processor sent stocks tumbling — just days after the market rallied on reports of better times to come for the chip industry. Intel rose 34 cents to $30.62 in today's trading.
The market was stronger in non-tech sectors. Merck climbed $1.06 to $68.48, Home Depot gained 71 cents to $48.99, and American Express advanced 39 cents to $40.17.
But Procter & Gamble fell 14 cents to $70.61 after posting a fourth-quarter loss of $320 million due to a massive $1.16 billion restructuring charge. Excluding the charge, the maker of Crest and Tide beat analysts' estimates by a penny.
Advancing issues outnumbered decliners 8 to 7 on the New York Stock Exchange. Volume came to 969.27 million shares, ahead of the 814.78 million that were traded yesterday.
The Russell 2000 index, which measures the performance of smaller company stocks, slipped 0.59 to 480.37.
Overseas markets were mixed. Japan's Nikkei stock average finished the day up 0.6 percent. In Europe, Britain's FT-SE 100 rose 0.2 percent, and Germany's DAX index inched up 0.1 percent, while France's CAC-40 fell 0.3 percent.
