Slumping Tech Stocks Drag Market Lower
A continuing slide in technology shares brought the entire stock market lower Friday. Shares of Internet brokerages and computer chip makers fell the hardest.
After a day of modest swings between positive and negative territory, the Dow Jones industrial average ended just 0.26 point lower, closing at 9,304.24.
Bond prices fell for the fifth straight day, rounding out their worst week in four months, after a government report showing a bigger-than-expected gain in jobs in January stoked speculation that the Federal Reserve will raise interest rates later this year.
The yield on the benchmark 30-year Treasury bond rose to 5.35% from 5.29% on Thursday.
The dollar rose against the yen on expectations that Japan will try to drive down bond yields. The dollar closed at 113.20 yen, up from 112.21 on Thursday.
The technology-heavy Nasdaq stock market fell 36.45 points to close at 2,373.62, leaving it 5.5% below its record 2,510.09 reached Monday.
A disappointing earnings forecast from Advanced Micro Devices on Thursday prompted investors to send its shares down $2.13 to close at $16.81 on the New York Stock Exchange.
AMD said its poor outlook is partly the result of price cuts by rival Intel. Several competing chip makers followed AMD lower as fears of a price war began to take hold. Intel fell $2.56 to $127.56 and Applied Materials fell $1.06 to close at $60.69 on Nasdaq.
The decline of technology stocks has worried some analysts. Highflying tech companies have been largely responsible for the market’s overall advances, leading some to fear that if the technology bubble bursts, the entire market will fall.
That was particularly true Friday of the Internet brokerages, which all paid a price for technical problems that plagued E-Trade Group throughout the week.
Shares of the online brokerages began tumbling Thursday after New York state’s attorney general announced an inquiry into their business practices. After a huge run-up in recent days, J.B. Oxford Holdings tumbled $4.13 to close at $11.75. AmeriTrade Holding fell $15.25 to $95.50.
Meanwhile, Apple Computer fell $1.56 to $36.31, Cisco Systems sank $4 to $101.25 and Gateway fell $2.50 to $74.
But Avid Technology rose $3.56 to $32 as a Morgan Stanley Dean Witter analyst raised the software maker’s rating.
Broader stock indicators kept their losses slim Friday. The blue-chip Standard & Poor’s 500 fell 9.09 points to 1,239.40, the NYSE composite index fell 3.76 points to 587.29, and the American Stock Exchange composite index fell 0.86 point to 706.26. The Russell 2,000 index of smaller companies fell 5.07 points to 412.72.
Declining issues outnumbered advancers by a 3-2 margin on the NYSE, where volume totaled 866.46 million shares, compared with 859.73 million in the previous session.
For the week, the Dow was off 0.6%, the S&P; 500 lost 3.1% and the Nasdaq composite fell 5.3%.
Among Friday’s highlights:
* Big oil companies rose as investors bet that a recent spate of cost cutting will help.
Atlantic Richfield gained $2.63 to $62.94, Exxon rose $1.88 to $71.69, Mobil climbed $2.69 to $88.44 and Texaco was up $3.63 to $52.
* CD Radio fell $7.13 to $25. The company will have to raise an additional $175 million before its satellite-to-car, digital radio network starts broadcasting because of satellite launch delays and added development payments to Lucent Technologies, according to a regulatory filing.
* ICN Pharmaceuticals fell $3 to $23.25. The company said the Belgrade government has illegally claimed control of ICN’s troubled Yugoslavian unit.
* Shop at Home rose $3.44 to $25.13 after the third-largest U.S. home-shopping specialty retailer agreed to broadcast on Echostar Communications’ DISH Network.
Overseas, Japan’s Nikkei stock average slipped 1.3%, Britain’s FTSE-100 dropped 1.4% and France’s CAC-40 eased 0.5%.
Market Roundup, C4
