Stocks Run Losing Streak to 5 Days

Major stock indexes fell for a fifth straight session Tuesday as investors worried over a drop in consumer confidence and fretted that markets were overpriced after scaling higher for nearly a year.

The Nasdaq composite index, home to many big-name technology shares, closed at a low for 2004 and pared its year-to-date gain to a slim 0.1%. Blue-chip stocks closed at three-week lows.

The consumer confidence report, which was released shortly after the market opened and set the tone for the day’s trading, showed an unexpectedly sharp decline in sentiment in February as Americans grew disenchanted with the economy, mainly because of a lack of new jobs.

“This confidence number is a little dose of reality for the market,� said Milton Ezrati, senior economic strategist at fund firm Lord Abbett. “But we think the fundamentals remain good.�

Wall Street has been on a roll since March, but stock prices have drifted down since hitting long-time highs in the last few weeks.

On Tuesday, the Dow Jones industrial average closed down 43.25 points, or 0.4%, at 10,566.37. The Standard & Poor’s 500 index fell 1.90 points, or 0.2%, to 1,139.09. Nasdaq, which slipped 2.08 points, or 0.1%, to 2,005.44, twice dipped below the 2,000 benchmark before recovering.

Winners and losers were evenly matched on the New York Stock Exchange, while declining stocks held a 5-to-4 edge on Nasdaq. Trading was active.

Technology shares were dragged down by semiconductor design software maker Synopsys, which late Monday said it would buy Monolithic System Technology and posted lower first-quarter financial results. Synopsys shares fell $4.55, or 13.2%, to $29.88. Monolithic skyrocketed about 85%, adding $5.97 to $12.97.

Among other tech shares, Hewlett-Packard, the world’s second-largest maker of computers, fell 41 cents to $22.50.

Still, technology shares, which led the market higher last year, may have further to rise, investment manager Sally Anderson of Kopp Investment Advisors told Bloomberg News.

“Eventually people are going to realize that the economy is indeed improving,� she said. “Once people start to look at that, then I think people will come back to areas� such as technology.

Fannie Mae and Freddie Mac, the biggest buyers of U.S. home mortgages, accounted for a quarter of the S&P; 500’s drop. Federal Reserve Chairman Alan Greenspan said the companies could pose a risk to the U.S. financial system because of their rapid growth. Fannie Mae fell $2.65 to $76.25. Freddie Mac lost $1.81 to $62.12.

In other trading, gold prices climbed back above $400, gaining $5.05 to $404.50 an ounce in New York, where oil futures also gained, climbing 23 cents to $34.58 a barrel as traders took defensive positions before today’s release of the weekly petroleum supply report.

Bond yields fell early in the session on the consumer confidence report but were little changed by day’s end. The yield on the benchmark 10-year Treasury note closed at 4.03%, down from 4.04% on Monday. The drop in confidence also hurt the dollar, which fell against the euro and the yen.

In other highlights:

* United Technologies weighed on the Dow for a second straight day, falling $1.97 to $91.83, after the company said there would be “negative impacts� from the Pentagon’s cancellation of the Comanche helicopter program.

* An index of phone stocks added 1.3%, marking the biggest gain of the S&P; 500’s 10 industry groups. Verizon Communications climbed $1.08 to $38.09. Shares of the biggest U.S. local-phone company may increase as rivals SBC and BellSouth focus on their acquisition of AT&T; Wireless Services, Morgan Stanley analyst Simon Flannery said.

* Healthcare stocks rose, led by Guidant, which gained $4.50, or 7.1%, to $67.95 for the biggest jump in the S&P; 500. The company obtained the right to co-promote Johnson & Johnson’s Cypher drug-coated stent, a device used to prop open clogged arteries. The pact grants Guidant immediate entry into a market that may reach more than $3 billion by the end of 2004. Johnson & Johnson rose $1.13 to $54.18.

* Disney, which is grappling with a takeover bid from Comcast, was the Dow’s biggest percentage loser, falling 79 cents, or 2.9%, to $25.96. Comcast shares rose 31 cents to $29.82.

* Netflix shed $3.82, or 11%, to $31.20. The biggest mail-order service for renting digital video discs said its first-quarter loss would be wider than expected because of greater marketing expenses. Netflix expects a loss of as much as $8.1 million.

* Calpine was the biggest loser in the S&P; 500 after the power producer canceled a $2.3-billion term loan and junk bond sale crucial to a refinancing plan as it met heavy resistance from investors overloaded with the company’s debt. Calpine shares fell 42 cents, or 7.3%, to $5.31.

Market roundup, C8-9