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Posted at 12:19 p.m., Tuesday, July 6, 2004

Oil, tech market, jobs disappointing for stocks

Hawai'i Stocks
Updated Market Chart

By Michael J. Martinez
Associated Press

NEW YORK — Rising oil prices and disappointing forecasts for the technology sector sent stocks skidding today, with pessimism over the economy further fueling the selloff. The tech-heavy Nasdaq composite index fell more than 2 percent, its biggest loss since mid-March.

A lower earnings forecast for tech bellwether Intel Corp. and a disappointing outlook from chip maker Conexant Systems Inc. triggered selling throughout the technology sector. Oil prices rose $1.26 to $39.65 a barrel on the New York Mercantile Exchange, adding to worries over inflation and the economy.

"My feeling is that people are really searching for some kind of a thesis for the second half, trying to figure out what will move stock prices, and we're not coming to any conclusions on that," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "The feeling is that we're one major piece of negative news away from more significant selling."

Investors were still nervous after Friday's lower-than-expected job creation figures, which led to concerns that the fast pace of economic growth is slowing. With little economic data due this week — and the bulk of second-quarter earnings at least a week away — the uncertainty translated into pessimism.

The Dow Jones industrial average fell 63.49, or 0.6 percent, to 10,219.34.

Broader stock indicators fell sharply. The Nasdaq dropped 43.23, or 2.2 percent, to 1,963.43, its biggest one-day drop since March 15. The Standard & Poor's 500 index was down 9.17, or 0.8 percent, at 1,116.21.

Wall Street was also concerned about Democratic presidential candidate John Kerry's selection of John Edwards as his running mate. Edwards, a trial lawyer, is seen by the conservative investment community as a proponent of the expensive class-action litigation that often troubles corporate America.

"Clearly, Edwards isn't the choice of business. But the primary question: Is John Kerry the choice for business?" Pears said. "The answer to that question is less clear for John Kerry, and he's the one running for president, not Edwards."

Dow component Intel dropped 22 cents to $26.11 after Lehman Brothers reduced its earnings forecast for the chip manufacturer because of lower back-to-school demand for personal computers.

Conexant, a small, wireless chip maker, said its third-quarter sales and earnings will fall below expectations due to weak sales. Conexant slid $1.77, or 43 percent, to $2.31.

"The thing with semiconductors is just going to repeat itself throughout the market," said Bill Groenveld, head trader at vFinance Investments. "If somebody has more seller interest on a given piece of news, they're going to pull out the negatives. If there's more buyer interest, you'll see the silver lining. Right now, there's just no volume and very little buyer interest."

Veritas Software Corp. plunged $9.55, or 36 percent, to $17.00 after it lowered its second-quarter earnings and revenue outlook, citing weakness in corporate software sales.

Declining issues outnumbered advancers by more than 3 to 2 on the New York Stock Exchange, where volume came to 1.17 billion shares, compared to 1.28 billion on Friday.

The Russell 2000 index of smaller companies was down 10.31, or 1.8 percent, at 572.41.

Japan's Nikkei average fell 0.6 percent. Britain's FTSE 100 closed down 0.7 percent, France's CAC-40 dropped 0.8 percent, and Germany's DAX index lost 1.3 percent.