Posted at 11:42 a.m., Friday, April 16, 2004
Tech stocks hit again in 'defensive’ selling
By Michael J. Martinez
Technology stocks again bore the brunt of investors’ anxiety, suffering after Nokia released a disappointing earnings report. That sent the Nasdaq composite index falling while the Dow Jones industrials and Standard & Poor’s 500, beneficiaries of investors’ migration toward stalwart stocks, posted solid gains.
Analysts said the market got some support from a jump in new housing construction last month. But analysts said concerns about higher rates, which grew out of a negative inflation report, are paramount in investors’ minds.
"We’re being reactive instead of proactive, but there’s still good things to come," said Brian Belski, market strategist at Piper Jaffray.
According to preliminary calculations, the Dow was up 54.51, or 0.5 percent, at 10,451.97.
Broader stock indicators were mixed. The S&P 500 index was up 5.73, or 0.5 percent, at 1,134.57. The Nasdaq slipped 6.43, or 0.3 percent, to 1,995.74 after dropping 22.68 yesterday.
For the week, the Dow gained 0.1 percent, the S&P 500 slipped 0.4 percent and the Nasdaq tumbled 2.8 percent.
The Commerce Department reported a strong 6.4 percent rise in new housing construction for March, the biggest jump in 10 months. But this was offset by a Federal Reserve report that production in America’s industrial sectors fell 0.2 percent after two months of gains, a far cry from the 0.3 percent rise economists expected.
But with surprisingly strong economic data this week, including a jump in retail sales, investors became concerned that the economy may grow too quickly, prompting the Federal Reserve to intervene sooner than expected with a rate hike to stave off inflation. And while many companies have been releasing good earnings reports, those were already factored into the market and so had little effect on the week’s trading.
Until another strong market driver becomes apparent, investors will continue to move toward blue chips and other defensive positions, analysts said.
"We made a lot of money last year and we’re trying to hang on to that performance," Belski said.
The technology sector saw more bad news today after a disappointing session yesterday. Nokia led the way with lower year-over-year profits, a 15 percent drop in mobile phone sales, warnings about second-quarter earnings and a gloomier 2004 outlook. Nokia tumbled $1.44 to $14.61.
Sun Microsystems Inc. slipped 16 cents to $4.26 after a greater-than-expected loss for the quarter.
The Russell 2000 index of smaller companies was up 3.07, or 0.5 percent, at 583.37.
Advancing issues outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, where volume came to 1.49 billion shares, compared with 1.56 billion yesterday.
Japan’s Nikkei stock average gained 0.2 percent.