Nasdaq rebounds, but Dow falls 84

`If tech doesn't work in this market, nothing can,' analyst says

Wall Street

September 01, 1999|By BLOOMBERG NEWS

NEW YORK -- The Nasdaq composite index rallied yesterday, led by computer shares including Sun Microsystems Inc. and Cisco Systems Inc., amid a flurry of alliances, new product orders and optimistic comments from analysts.

The Nasdaq gained 26.66 to 2,739.35 after three days of losses. But the Dow Jones industrial average slumped late in the session, ending the day down 84.85 at 10,829.28, and the Standard & Poor's 500 index slid 3.61 to 1,320.41.

"If tech doesn't work in this market, nothing can," said Larry Seibert, a money manager at Barrett Associates. Technology is "a greater and greater portion of the economy."

Other broad-market indicators also were mixed. The Russell 2,000 index, a benchmark of small-cap stocks, inched up 0.47 to 427.83; the Wilshire 5,000 index slumped 27.36 to 12,042.23; the American Stock Exchange composite index advanced 0.20 to 775.41; the New York Stock Exchange composite index skidded 2.80 to 612.33; and the S&P 400 midcap index added 0.38 to 393.08.

The 100-stock Bloomberg Maryland index lost 0.72 to 193.60.

Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange, where 861.7 million shares changed hands.

For the month, the Nasdaq climbed 3.9 percent, the Dow rose 1.9 percent and the S&P 500 lost 0.5 percent.

Inadvertent release

Stocks fell yesterday after the National Association of Purchasing Management inadvertently released its monthly survey on August manufacturing activity a day early.

Most troubling to stocks was that prices paid by industry for raw materials and supplies rose to the highest levels since June 1995, suggesting that inflation may be building as the economy continues to grow.

The late selling also may have been partly blamed on an increase in weighting of two S&P 500 components, Supervalu Inc. and Eastern Enterprises, at the market's close, said Diane Garnick, equity derivatives strategist at Merrill Lynch & Co.

"This means that S&P 500 index managers will have to sell other securities to generate the cash necessary to buy additional shares of Supervalu and Eastern Enterprises," she said.

S&P increased the weighting of Supervalu to account for the new shares issued by the supermarket company in its purchase of Richfood Holdings Inc. The weighting of Eastern Enterprises was increased to account for the issue of new shares after its purchase of Colonial Gas Co.

International Business Machines Corp. climbed $1.4375 to $124.625.

IBM-Cisco deal

The world's largest computer maker said it will sell $2 billion of computer parts to Cisco over five years as IBM bids to become a dominant components supplier, and will help maintain computer networks for customers of Cisco, the No. 1 maker of Internet equipment.

Cisco rose $1.0625 to $67.8125.

Sun Microsystems jumped $3.875 to $79.50 after analyst Steven Milunovich at Merrill Lynch named the No. 4 maker of computer servers a "focus 1 selection."

Apple Computer rose $3.1875 to $65.25 after the PC maker unveiled a PowerMacintosh G4 professional personal computer and said it received 140,000 orders for its new iBook portable machine.

Hewlett-Packard Co. added $2.5625 to $105.375. The world's No. 1 office and home printer maker said it's introducing a line of toner cartridges for rivals' products, its first foray into selling supplies for competitors' machines. HP first will sell toner cartridges that fit Xerox Corp.'s copiers, as the two battle over market share.

Office Depot Inc., the world's largest office-supply retailer, dropped $3.3125 to $10.4375 in NYSE trading and was the biggest loser in the S&P 500.

The retailer had said after the market closed Monday that second-half profit will miss analysts' forecasts because of slow sales and the cost of adding stores.

Staples Inc., the No. 2 office-supplies chain, fell 18.75 cents to $21.75. The stock was downgraded to "attractive" from "buy" by analyst Aram Rubinson at PaineWebber Inc.

Most oil companies were higher, including Dow components Chevron Corp., up $1 to $92.3125, and Exxon Corp., up $1.0625 to $78.875.

Many cyclical stocks, whose performance is tied to the fortunes of the broader economy, fell yesterday. Sears, Roebuck & Co. dropped $2 to $37.50, and Caterpillar Inc. lost $2.875 to $56.625.

Kaufman & Broad Home Corp. fell 37.5 cents to $20.4375 after the second-largest U.S. homebuilder said it lost $12 million from unauthorized trading by an employee in its mortgage unit. The losses will cut fiscal third-quarter earnings by 26 percent, or 24 cents a share, the company said.

Albertson's Inc. fell $1.50 to $47.9375. The No. 2 U.S. supermarket chain said it lost money in the second quarter because of costs related to its $12.5 billion acquisition of American Stores Co. Albertson's said it expects more such costs over the next two years.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.