Stocks Sag, Nasdaq Sees Terrible Month
Thu Feb 28, 6:23 PM ET
By Haitham Haddadin
NEW YORK (Reuters) - Stocks closed a seesaw session lower on Thursday, sending the Nasdaq market to its biggest monthly loss since September, as investor jitters about prospects for key chip makers outweighed surprisingly upbeat economic data.
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"The market has had so much swing, it can be called a Benny Goodman market," said Fahnestock & Co. market strategist Alan Ackerman, referring to the American band leader known as the King of Swing. "While economic news is improving, once again the lack of visibility on earnings ahead has kept a great deal of money on the sidelines."
Positive news on the economic front, including a report showing the economy grew much faster than expected in the final three months of last year, lifted the market in early trading. Upbeat remarks from manufacturing heavyweights such as General Electric also helped lift the blue-chip sector.
But lingering questions about the strength of the economy's anticipated comeback, along with persistent jitters over corporate accounting, tempered investors' enthusiasm. A dull financial forecast from Genesis Microchip Inc. and a warning from computer maker Gateway Inc. cast a pall over tech stocks.
"Investors are fairly confident that there could be some recovery certainly in the blue chip stocks and the traditional economy," said Rick Meckler, president of investment firm LibertyView. "What is less certain to them is what it means for technology because the valley in technology seems much deeper."
The blue-chip Dow Jones industrial average <.DJI> finished down 21.45 points, or 0.21 percent, at 10,106.13, after rising as high as 10,238.70. The broader Standard & Poor's 500 Index <.SPX> slipped 3.16 points, or 0.28 percent, at 1,106.73. The technology-laced Nasdaq Composite Index <.IXIC> fell 20.36 points, or 1.16 percent, at 1,731.52.
The Nasdaq finished down 10.50 percent in February -- its worst monthly drop since a 17 percent decline last September, when it slumped to 3-year lows after the hijacking attacks on the United States. The Dow, by contrast, rose 1.9 percent for February.
The leading indexes dipped after rumors of a possible hijacking of a New York-bound Air India airliner, which reawakened memories of the Sept. 11 attacks on the World Trade Center and Pentagon (news - web sites). U.S. law enforcement officials later denied there was any fear of a hijacking.
"There was a story that someone on the terrorist list was on a plane headed to the United States," said Bob Harrington, head of listed trading at UBS Warburg. "The market saw that and it might have caused some concern."
Semiconductor stocks fell after a report late on Wednesday showed sales of microchip-making gear tumbled 41 percent last year, posting a bigger drop than the preliminary statistics put out in December and the worst-ever decline.
Computer chip giant Intel Corp. fell 90 cents to $28.99. The Philadelphia semiconductor index <.SOXX> lost more than 3 percent.
Genesis Microchip Inc. plunged $17.51 to $23.49, or nearly 43 percent, after the display technology company's financial forecast showed no boost to results from a recent acquisition.
Gateway fell 50 cents to $4.60 after the company warned of a wider-than-expected first-quarter loss and pushed back its profitability forecast for the year.
Financial stocks like American Express Co. and Citigroup and manufacturing and defense firms United Technologies and General Electric Co. helped keep the blue-chip Dow in positive territory for most of the session, but later the two gave up their gains.
American Express gained 68 cents to $36.45 while Citigroup rose $1.01 to $45.25, lifting the Dow.
United Technologies, also a Dow member, finished flat at $72.95, having risen to as high as $74.90 during the session after its plane-engines maker Pratt & Whitney joined rival General Electric Co. in saying it was increasingly hopeful for a recovery in the depressed civil market.
GE, which said it sees stronger 2002 revenues than previously forecast, rose to a session high of $39.62, but finished with a loss of 25 cents at $38.50 when the Dow turned tail.
AOL Time Warner Inc. gained $1.05 to $24.80. Fitch ratings affirmed the outlook and ratings on the media and entertainment company's debt. But Gap Inc. was the New York Stock Exchange (news - web sites)'s most active share. Gap fell 43 cents to $11.97 after suffering a debt downgrade and posting its first back-to-back loss earlier in the week.
Good tidings came from Best Buy Co. Inc. , sending its shares up $1.70 to $67.40. The No. 1 U.S. consumer electronics chain said its quarterly sales are still on plan, and it expects its earnings for the period to top both its earlier view and current analysts' forecasts.
Riverstone Networks Inc. sank $3.77 to $3.82, or nearly 50 percent, after the network equipment maker said it was cutting its work force and would miss quarterly earnings estimates amid a deepening slump in the telecoms market.
Technical resistance -- the point where sellers are likely to emerge -- is at 10,300 on the Dow, at 1,780 for Nasdaq and 1,120 for the S&P, according to research firm Schaeffersresearch.com.
Support -- where buyers are expected to swoop in -- is at 10,000 for the Dow, 1,700 for the Nasdaq and 1,100 for the S&P. The levels are key elements of technical analysis, which studies prices, volume and charts |
