QCOM--Blue Chips Fall; Qualcomm Lifts Techs
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Blue chips fell on Friday as investors digested mixed jobs data that dampened hopes for a near-term cut in interest rates, but solid earnings from wireless company Qualcomm Inc. (NasdaqNM:QCOM - news) spurred a rise in beaten-down technology stocks.
Investors also were biting their nails over the neck-and- neck presidential race between the Republican candidate, Gov. George W. Bush (news - web sites) of Texas, and the Democrat, Vice President Al Gore (news - web sites), less than a week away.
``There is so much uncertainty, both domestically and internationally, in addition to results of the quarter that were adequate, but not sensational,'' said Jere Estes, a portfolio manager at Investment Counselors of Bryn Mawr.
The blue chip Dow Jones Industrial average (^DJI - news) ended down 62.56 points, or 0.57 percent, at 10,817.95, capping its gain for the week at 2.1 percent. The broader Standard & Poor's 500 Index (^SPX - news) slipped 1.64 points, or 0.11 percent, at 1,426.68.
The technology-packed Nasdaq Composite Index (^IXIC - news) rose 22.55 points, or 0.66 percent, to 3451.57, bringing its weekly gain to 5.3 percent.
Blue chips outpaced tech stocks for much of October, when the tech sector was hammered by worries of slowing profits. That trend reversed Wednesday.
``The Dow has rallied ... while Nasdaq was going down and now it appears that there's profit-taking in those cyclical issues and a continuing decent bounce in Nasdaq,'' said Scott Bleier, chief investment officer at Prime Charter Ltd.
The latest employment data from the Labor Department showed the pace of job creation slowed in October, adding to a growing pile of evidence indicating that the pace of U.S. economic growth is easing.
But the report offered few indications the tight labor market, which Federal Reserve officials have long worried might push up inflation, is loosening.
The U.S. unemployment rate held steady at a 30-year low of 3.9 percent, while average hourly earnings, closely monitored for signs of emerging wage pressures, rose 0.4 percent, exceeding expectations of a 0.3 percent rise.
``This hints very strongly that there's going to be considerable momentum on the cost side of the economy, even though the demand side is slowing down,'' said Pierre Ellis, senior economist at Decision Economics. ``That says margin squeeze -- and that's bad for stocks.''
Blue chips were lagging, dragged down by the likes of drug company Merck & Co. (NYSE:MRK - news), down $1-3/8 to $87-3/4, and diversified manufacturer United Technologies (NYSE:UTX - news) , down $1-3/4 at $67.
But the Nasdaq market was lifted as Qualcomm's rosy earnings news whetted investors' appetites for beaten-down high-tech shares.
Qualcomm rallied $7-11/16, or more than 12 percent, to $70-1/2 after beating analysts' estimates as solid licensing revenues more than compensated for lower phone sales in South Korea.
U.S. telephone giant Worldcom Inc. (NasdaqNM:WCOM - news) was the Nasdaq's most heavily traded stock, up 7/16 at $18 after taking a severe beating earlier in the week on a poor revenue forecast
and news it would restructure itself.
But yet another warning of softer profits from the telecom sector -- this time from Sprint Corp. (NYSE:FON - news) -- failed to have the same impact. Sprint warned its profits through 2001 would be lower than expected amid lackluster revenue growth, but its stock managed a gain of $1-3/8 to $23-7/8.
``This news is going to be looked at as almost positive by the market,'' said A.G. Edwards analyst Tony Ferrugia. ``People were (wondering) if Sprint was going to drop a bomb on them because they've had a couple of bombs dropped on them already.''
But Sprint's wireless telephone arm, Sprint PCS (NYSE:PCS - news), dropped about 22 percent, off $8-1/16 to $28-1/2, on a dim sales forecast.
Internet stocks were one of the main forces powering the Nasdaq higher. Web equipment maker Juniper Networks Inc. (NasdaqNM:JNPR - news) jumped $21-1/4 to $216-1/8, a gain of close to 11 percent. The American Stock Exchange's Internet index (^IIX - news) climbed 2.59 percent.
Firms that make advanced gear for data transmission also bounced back after these fiber-optics stocks were hit hard in recent weeks by signs of slipping sales. Corning Inc. (NYSE:GLW - news) was the most actively traded stock on the New York stock exchange, rising $1-7/8 to $73-1/8, while Nortel Networks (NYSE:NT - news) rose $2-3/8 to $45-1/8.
Software maker Sun Microsystems Inc. (NasdaqNM:SUNW - news) also bolstered the Nasdaq with a gain of $4 to $113-1/16. |
