Wednesday, July 21, 2004
Stocks Tumble as Investors Dump Techs
Stocks Tumble as Investors Dump Techs
Reuters
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Stocks tumbled on Wednesday, with technology shares leading the retreat, as fears about slowing growth in corporate profits overshadowed favorable news from Motorola Inc.(NYSE:MOT - news) and Microsoft Corp. (Nasdaq:MSFT - news)
The technology-dominated Nasdaq Composite Index (^IXIC - news), which had rallied on Tuesday, fell more than 2 percent, recording its biggest one-day percentage loss in more than 4 months and its lowest close in nine months.
Solid results from conglomerate United Technologies Corp. (NYSE:UTX - news) and others held up the blue-chip Dow Jones industrial average (^DJI - news) for much of the day, but the Dow fell into negative territory in a late-day flurry of selling.
"The problem is that so many people are expecting that technology performance can't go up from here," said Brian Pears, head of equity trading at Victory Capital Management. He said the sector's strength in the second half of 2003 will make year-over-year improvement in the months ahead difficult.
Microsoft rose a day after it said it would return more than $75 billion in cash to shareholders over the next four years but ended well below the day's high.
The technology-laced Nasdaq Composite Index (.IXIC) fell 42.70 points, or 2.23 percent, to 1,874.37, its lowest close since Oct. 24, 2003. It posted its biggest percentage loss since March 15.
The Dow Jones industrial average (.DJI) fell 102.94 points, or 1.01 percent, to 10,046.13, its lowest close since May 24. The Standard & Poor's 500 Index (^SPX - news) fell 14.79 points, or 1.33 percent, to 1,093.88, its lowest close since May 21.
Trading was heavy, with about 1.7 billion shares traded on the New York Stock Exchange (news - web sites) and 2.1 billion shares on Nasdaq.
Motorola's shares fell more than 7 percent, or $1.22, to $14.87. The company reported its second straight quarter of strong results on Tuesday, but with price competition from its rivals growing increasingly fierce, investors are questioning the sustainability of its growth.
"People are thinking of Motorola as having peaked," said Bernstein & Co. analyst Paul Sagaw, who has an "underperform" rating on the stock.
Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) repeated to a House committee what he told a Senate panel a day earlier that the economy was in a self-sustaining expansion and was generating price increases, but they were not enough to threaten the economy.
United Technologies gave a lift to the blue-chip Dow after posting a 32 percent rise in quarterly earnings, climbing 2 percent, or $2.10, to $92.67.
No. 2 U.S. bank J.P. Morgan, which recently purchased Bank One, also boosted the Dow. The company reported a quarterly loss after setting aside an additional $2.3 billion for legal costs, but an analyst said the company's stock got a boost on relief that the loss was not larger. It rose 1 percent, or 42 cents, to $36.82.
Cellular phone company Nextel Communications Inc. (Nasdaq:NXTL - news) helped pull the Nasdaq lower as investors worried the company's tax rate would increase this year, analysts said. The stock fell $1.54, or 6 percent, to $24.46.
Mercury Interactive Corp. (Nasdaq:MERQ - news), whose software helps companies test and improve technology, posted lower quarterly earnings and forecast that profit for the current quarter could be lower than what Wall Street expected.
It fell $4.80, or 11 percent, to $37.93, weighing on the Nasdaq.
Genetic research company Invitrogen Corp. (Nasdaq:IVGN - news) lowered its revenue outlook due to increased competition, sending its shares plummeting, as the maker of kits for genetic research posted a higher quarterly profit. It was down $14.99, or 23 percent, to $51.16.
Microsoft said after Tuesday's close it planned to buy back its own stock, double its dividend and issue a special one-time dividend.
Shares of Microsoft, the world's largest software maker, gained 54 cents, or 2 percent, to $28.86, after climbing as high as $29.89. About 188 million Microsoft shares changed hands on the Nasdaq, surpassing the 30-day average daily volume of 71.5 million shares. (Additional reporting by Ben Klayman)
Reuters
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Stocks tumbled on Wednesday, with technology shares leading the retreat, as fears about slowing growth in corporate profits overshadowed favorable news from Motorola Inc.(NYSE:MOT - news) and Microsoft Corp. (Nasdaq:MSFT - news)
The technology-dominated Nasdaq Composite Index (^IXIC - news), which had rallied on Tuesday, fell more than 2 percent, recording its biggest one-day percentage loss in more than 4 months and its lowest close in nine months.
Solid results from conglomerate United Technologies Corp. (NYSE:UTX - news) and others held up the blue-chip Dow Jones industrial average (^DJI - news) for much of the day, but the Dow fell into negative territory in a late-day flurry of selling.
"The problem is that so many people are expecting that technology performance can't go up from here," said Brian Pears, head of equity trading at Victory Capital Management. He said the sector's strength in the second half of 2003 will make year-over-year improvement in the months ahead difficult.
Microsoft rose a day after it said it would return more than $75 billion in cash to shareholders over the next four years but ended well below the day's high.
The technology-laced Nasdaq Composite Index (.IXIC) fell 42.70 points, or 2.23 percent, to 1,874.37, its lowest close since Oct. 24, 2003. It posted its biggest percentage loss since March 15.
The Dow Jones industrial average (.DJI) fell 102.94 points, or 1.01 percent, to 10,046.13, its lowest close since May 24. The Standard & Poor's 500 Index (^SPX - news) fell 14.79 points, or 1.33 percent, to 1,093.88, its lowest close since May 21.
Trading was heavy, with about 1.7 billion shares traded on the New York Stock Exchange (news - web sites) and 2.1 billion shares on Nasdaq.
Motorola's shares fell more than 7 percent, or $1.22, to $14.87. The company reported its second straight quarter of strong results on Tuesday, but with price competition from its rivals growing increasingly fierce, investors are questioning the sustainability of its growth.
"People are thinking of Motorola as having peaked," said Bernstein & Co. analyst Paul Sagaw, who has an "underperform" rating on the stock.
Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) repeated to a House committee what he told a Senate panel a day earlier that the economy was in a self-sustaining expansion and was generating price increases, but they were not enough to threaten the economy.
United Technologies gave a lift to the blue-chip Dow after posting a 32 percent rise in quarterly earnings, climbing 2 percent, or $2.10, to $92.67.
No. 2 U.S. bank J.P. Morgan, which recently purchased Bank One, also boosted the Dow. The company reported a quarterly loss after setting aside an additional $2.3 billion for legal costs, but an analyst said the company's stock got a boost on relief that the loss was not larger. It rose 1 percent, or 42 cents, to $36.82.
Cellular phone company Nextel Communications Inc. (Nasdaq:NXTL - news) helped pull the Nasdaq lower as investors worried the company's tax rate would increase this year, analysts said. The stock fell $1.54, or 6 percent, to $24.46.
Mercury Interactive Corp. (Nasdaq:MERQ - news), whose software helps companies test and improve technology, posted lower quarterly earnings and forecast that profit for the current quarter could be lower than what Wall Street expected.
It fell $4.80, or 11 percent, to $37.93, weighing on the Nasdaq.
Genetic research company Invitrogen Corp. (Nasdaq:IVGN - news) lowered its revenue outlook due to increased competition, sending its shares plummeting, as the maker of kits for genetic research posted a higher quarterly profit. It was down $14.99, or 23 percent, to $51.16.
Microsoft said after Tuesday's close it planned to buy back its own stock, double its dividend and issue a special one-time dividend.
Shares of Microsoft, the world's largest software maker, gained 54 cents, or 2 percent, to $28.86, after climbing as high as $29.89. About 188 million Microsoft shares changed hands on the Nasdaq, surpassing the 30-day average daily volume of 71.5 million shares. (Additional reporting by Ben Klayman)
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