CHICAGO, July 20 (Reuters) - U.S. stock index futures ended lower Tuesday as sharp
weakness in the technology sector dragged down the rest of the market.
September Standard & Poor's ended sharply lower, but light institutional buying pared some
losses.
The technology sector was hammered by worries about further growth, partly spurred by
comments from Microsoft that tempered its better than expected earnings.
''They (traders) were focusing a little more on the Nasdaq being down 3.25 percent and (S&Ps) having made new lows here,''
said Wally Chin, equities and derivatives analyst at Prudential.
Jitters in the Nasdaq could continue Wednesday as two Internet giants, America Online and Amazon.com, are scheduled to
release their earnings after the market's close.
''The cautionary comments from Microsoft yesterday and this morning from Lucent (Technologies) puts a damper on the
technology (sector). Lucent and telecoms were making new highs and there was a lot of confidence going forward that it will
continue,'' Chin said. ''But you have to view this as a temporary setback, for Nasdaq in particular.''
However, some companies with better-than-expected corporate earnings outside of technology saw weaker trade, said
Richard Moroney, editor, Dow Theory Forecasts.
''The fact stocks are selling off on good news suggests that the good news has already been discounted,'' Moroney said.
''Dow stocks earnings have been pretty strong across the board, and I'm trying to think of a single one that popped on that
news and maintained its gains.''
Moroney said he views the weakness as corrective.
Institutional selling was heavy early and helped to spur the selloff, traders said. Alan Bush, associate vice president of A.G.
Edwards & Sons, said volume was solid.
''We had a very active day, and we saw commercials on both sides of the market late and a little commercial buying in the
Nasdaq too,'' he said.
The break took September S&Ps through several levels of support between 1,398.00 and 1,392.00. Traders said the close
under 1,392.00 suggests further weakness. Moroney said short-term support is seen at 1,350.00.
Earnings are expected to dominate Wednesday's action, but traders are looking ahead to Thursday's Humphrey-Hawkins
testimony by Federal Reserve Chairman Alan Greenspan to Congress. The market will look for any clue to where monetary
policy is headed prior to the August Federal Open Market Committee meeting.
At settlement, September S&Ps were down 30.50 points at 1,387.50, CBOT Dow contracts down 219 at 11,031, CME
Nikkeis down 60 at 18,330, Nasdaq 100s down 2.50 at 2,353, Russell 2000s off 9.85 at 454.60 and Midcap 400s off 8.30
at 418.70.
**If naz's holding up well tomorrow, we might start our bargain hunting right?
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