Broad Market Sinks in Tech Downdraft

Wall Street on Wednesday posted its fifth loss in seven sessions, as earnings worries dogged key technology stocks.

Yet while the Nasdaq index fell 41.85 points, or 1%, to 3,987.72, it bounced up from a low of 3,906.

The Dow industrial average was less fortunate: The blue-chip index slid 183.49 points, or 1.7%, to 10,516.48, closing at its low for the day.

The Standard & Poor’s 500 index fell 1.5%.

Tech stocks were pulled lower by heavy selling in key semiconductor issues, despite strong earnings reports from many of the companies in recent days.

Xerox helped keep the mood downbeat after it forecast weaker earnings in the current quarter. Other tech giants that have recently warned of earnings trouble ahead include Lucent Technologies and Agilent Technologies.

“Most of the good news about earnings is already out there, and money managers are asking themselves what the catalyst to take stocks higher is going to be,” said David Brady, who helps manage about $1.5 billion at Stein Roe & Farnham Inc.

Average year-over-year profit growth for the companies in the S&P; 500 is expected to slow to 20.6% for the second quarter, 17.7% in the third and 15.7% in the final three months of the year, according to earnings tracker First Call/Thomson Financial.

The expected third- and fourth-quarter growth rates have fallen in the past three weeks as some companies have warned of disappointing profits later in 2000.

One of the firms warning on Wednesday was auto giant DaimlerChrysler. Its stock, however, gained $1.31 to $53.56 after the firm promised to cut costs.

In the Internet sector, Amazon.com tumbled in after-hours trading after reporting a wider loss for the quarter.

JDS Uniphase, which helped cushion Nasdaq by gaining $5.75 to $135.94 in regular trading, before the company reported earnings, fell initially in after-hours activity but then rebounded to just below the Nasdaq close.

Some analysts said the market is simply struggling to make sense of how a supposedly slowing economy may affect corporate profits in the second half and in 2001.

Others say the latest volatility shows that the market is still very much in the grip of short-term traders.

Overall, losers topped winners by 23 to 16 on Nasdaq and by 15 to 14 on the New York Stock Exchange.

The bond market, meanwhile, again showed little change, awaiting key reports today on employment costs in the second quarter and durable goods orders for June.

In the corporate bond market a flood of new debt hit the market, including $6 billion in bonds from Ford Motor Credit Co.

Among Wednesday’s highlights:

* Xerox tumbled $2.94 to $15.25 on its earnings warning. Another big casualty was software firm Remedy, down $19.73 to $22.38 after analysts downgraded the stock, citing a sales shortfall.

The Dow was hurt by Hewlett-Packard’s slide of $5.38 to $110, which analysts said may have reflected worries about rival Xerox.

* Losers in the chip sector included Cypress Semiconductor, down $2.75 to $43, and Advanced Micro Devices, down $2.56 to $76.19. Intel eased $1.88 to $139.

* In the Net sector, EBay fell $3.56 to $52.69, Inktomi slid $2.94 to $112 and Priceline.com dropped $2.63 to a 52-week low of $28.63.

* Insurance stocks were winners even as the rest of the market fell, helped by some healthy earnings reports in recent days. Allstate gained $1.31 to $26.75 and American International Group added $1.13 to $124.88.

But bank stocks were mostly lower. J.P. Morgan fell $4.75 to $131.44 and Chase Manhattan lost $1.88 to $49.38.

* In the new-issues market,Tycom, a fiber-optic cable spinoff of Tyco International, priced 61 million shares at $32 each, which was above expectations. The stock will begin trading today under the symbol TCM.

Market Roundup: C11-12