Posted at 11:22 a.m., Wednesday, May 15, 2002
Stock rally ends; tech shares rise
By Amy Baldwin
"The evidence mounts that we are on the recovery side of things, and the economists are bullish. But we aren't going to have a big rally until we get some confirmation of earnings and revenue growth," said Philip Dow, managing director of equity strategy at Dain Rauscher Wessels in Minneapolis.
The Dow closed down 54.46, or 0.5 percent, to 10,243.68, according to preliminary calculations.
The broader market was mixed. The Nasdaq composite index rose 6.51, or 0.4 percent, to 1,725.56, after a two-day gain of 118.20. The Nasdaq had not seen three consecutive wins since a four-day rally March 26 through April 1.
The Standard & Poor's 500 index fell 6.21, or 0.6 percent, to 1,091.07, after rising 42.29 the previous two days.
Many analysts believe the market's recent selloff climaxed last week when the major indexes closed at levels not seen since early October. In the short run, they expect the indexes to trade within a narrow range.
"I don't think we are quite through with the down days, but I think we are at the end of the decline," said Al Mirman, strategist at V Finance in Sarasota, Fla.
Mirman added that the market can't keep rising at the intense pace of Monday and yesterday because technical factors short-covering and lower prices were the catalysts rather than a change in fundamentals like earnings growth. In short-covering, investors who had bet that the market was headed lower are forced to buy stocks when the market advances.
Still the tech sector eked out an advance. Applied Materials inched up 11 cents to $26.75 after releasing stronger-than-expected second-quarter earnings late yesterday and offering cautious optimism about the future.
But Dow industrial IBM fell 98 cents to $84.50 as executives prepared to meet later in the day with analysts to discuss its business outlook.
Hewlett-Packard, also a Dow stock, fell $1.15 to $19.35 after releasing earnings results late yesterday for its fiscal second quarter. The company met expectations but refused to make projections about future business, saying more details will be disclosed at a securities analysts meeting June 4.
Outside tech, Schering-Plough slid $3.49 to $25 on news that the Food and Drug Administration is conducting a criminal investigation into one or more of the company's products made in Puerto Rico.
Honeywell slipped 9 cents to $39.25 after announcing it was laying off as many as 900 workers and closing four facilities near Minneapolis.