Posted at 11:45 a.m., Tuesday, May 22, 2001
Tech stocks favored over blue chips as Nasdaq rises again
Associated Press
NEW YORK — Investors gravitated toward technology stocks again today, sending the Nasdaq composite index higher — albeit modestly — for a sixth straight session, its longest winning streak since February 2000.
Blue chips faltered, however, on a mix of company news and profit-taking and an expected pullback from the advance that sent the Dow Jones industrials up 464.95, or 4.3 percent, over the previous four sessions.
"I think the investment public is really falling back in love with technology and telecom, and it's been a long, long time since that's been the case," said Arthur Hogan, chief market analyst at Jefferies & Co.
"It's not surprising, though. If this economy is going to turn around — and it's showing signs that it is — the companies that are going to do the best the fastest are going to be in the technology sector. "
The Nasdaq closed up 8.23 at 2,313.82, a nearly 0.4 percent gain, according to preliminary calculations, for a total advance of 231.90, or 11.1 percent since last Tuesday. The index's last six-day advance ended Feb. 8, 2000.
The Dow fell 80.68, or 0.7 percent, to 11,257.24, giving back the gains that sent it to its highest close yesterday since Jan. 20, 2000, when it reached 11,351.30.
The broader Standard & Poor's 500 index slipped 3.45, or nearly 0.3 percent, to 1,309.38.
Gainers included Microsoft, up $1.49 at $70.28, and Cisco Systems, up 59 cents at $23.46. But other high-profile tech stocks fell, including Oracle, down 55 cents at $17.55.
Blue chips were likewise choppy, reflecting profit-taking from the sector's big run-up last week. Retailer Home Depot slipped 39 cents to $52.99, while Target was up $1.14 at $38.89 on better-than-expected earnings.
Many stocks moved based on individual companies' announcements rather than investors' overall worries about the economy or weak earnings reports, which have controlled trading activity in recent weeks.
AOL Time Warner fell 45 cents to $56.15, despite an advance earlier in the session when it announced its America Online unit was increasing the monthly price of its unlimited use plan by about 9 percent to $23.90.
Investors also punished Merck, which dropped $2.30 to $75.10, after a New York Times article questioned the safety of its drug Vioxx and also that of Celebrex, made by Pharmacia and co-marketed by Pfizer. Pharmacia fell 52 cents to $49.50 and Pfizer lost 72 cents to $44.04.
Analysts have been expecting investors, still concerned about when corporate profits will improve, to pull back and take profits from the market.
Wall Street has been rallying since early April, primarily in response to the five interest-rate cuts by the Federal Reserve this year. Money that was has been on the sidelines for months while the economy struggled has been coming back into the market, and some retreat was inevitable as investors took profits and adjusted their portfolios.
This week Wall Street has been concentrating on technology issues — a contrast to last week, when blue chips were the focus.
"The next few months we may see some seesawing, because there's going to be plenty of negative news in second-quarter preannouncements," said Ronald J. Hill, investment strategist at Brown Brothers Harriman. "But in the end, I think most people will be convinced that ... the worst is over."
The Russell 2000 index rose 1.32, or 0.3 percent, to 517.23.
Declining issues led advancers 15 to 14 on the New York Stock Exchange, where volume came to 984.04 million shares.
