Dow Down 18.65; Nasdaq Up 22.65
Dec. 13, 1999
NEW YORK (AP) _ Stocks were mixed today after a pessimistic earnings forecast from Xerox unsettled some investors but failed to keep others from their pursuit of technology shares.
In midday trading on Wall Street, the Dow Jones industrial average was down 18.65 at 11,206.05.
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 0.58 at 1,416.46, and the Nasdaq composite index was up 22.65 at 3,642.89.
The Dow's financial stocks, which rose sharply on Friday, slipped back today. American Express fell 1 7/8 to 165 7/8, and Citigroup fell 15/16 to 55 3/16.
The broader market was rattled by a warning from Xerox late Friday. The maker of copiers and printers said it expects fourth-quarter sales to slip and earnings to come in 40 percent below analysts' expectations. Xerox cited a shortfall in sales due to Year 2000 computer concerns
The warning from Xerox rattled investors who are counting on strong corporate profit growth in the fourth quarter. With market averages at or near record levels, investors are demanding strong earnings growth to justify the high prices of many stocks.
Xerox itself rose 1 11/16 to 21 3/4. The company's shares fell to a 52-week low in Friday's late trading session, dipping to 19 7/8 and prompting some bargain-hunting today, traders said.
Investors also returned to the market in search of some technology favorites. Applied Materials rose 1 to 110 7/16, and IBM rose 1 5/8 to 110 5/8.
Technology has dramatically outperformed the rest of the market this year, leaving some analysts concerned that the sector's strength is masking weakness in the broad market.
``Without a pickup in breadth and an improvement in the underlying structure of the market, markets would be increasingly vulnerable to a more serious decline,'' said A.C. Moore, chief investment strategist at Dunvegan Associates Inc. in Santa Barbara, Calif.
Trading was fairly quiet as some investors chose to wait for Tuesday's report on the consumer price index. The report, the government's most closely watched inflation gauge, is expected to be benign. But Wall Street remains wary of inflation, which could prompt the Federal Reserve to raise interest rates some time in the next few months.
The Fed raised rates three times in 1999, and economists are divided on whether the increases have successfully cooled the economy to a sustainable rate.
Declining issues outnumbered advancers by a 3-to-2 margin on the New York Stock Exchange, where volume came to 441.10 million shares, behind Friday's pace.
The Russell 2000 index of smaller companies rose 1.69 to 468.40.