Tech Stocks Lead Fall; Dow Off 66.01
NEW YORK (AP) _ Stocks fell today, led by a selloff in technology shares after Compaq Computer’s warning of soft sales raised concerns of slowdown in the computer market.
At noon on Wall Street, the Dow Jones industrial average was down 66.01 at 9,300.33, adding to Thursday’s 33.33-point decline.
Broader stock indicators were mostly lower.
Compaq Computer, the world’s biggest maker of PCs, warned analysts that sales in its small and medium business market have been slow this quarter. That prompted Merrill Lynch and Credit Suisse First Boston to cut its first-quarter earnings projection for Compaq, which sent the stock down 5 3/8 at 35 5/8 on the New York Stock Exchange.
Other computer-makers, including IBM, Gateway and Dell Computer, also fell sharply today on concerns that their sales may also slow in coming months.
Also lower in the technology sector was Intel, which fell sharply after PC Data reported that Advanced Micro Devices AMD-K6 processor-based computers outsold all Intel-based desktop PCs in the U.S. retail market. It was the first time that Intel fell out of the top spot.
Intel was down 7 9/16 at 120 3/16 in Nasdaq trading.
The stock market also came under pressure today after the Commerce Department reported that the U.S. economy grew at a faster-than-expected 6.1 percent annual rate in the final three months of 1998, the quickest pace in nearly 15 years.
Growth in gross domestic product, the nation’s total output of goods and services, had been originally reported at 5.6 percent for the fourth quarter.
While the report showed the economy growing at a faster pace than expected, it also showed that inflation rose just 1 percent last year, the slowest pace since a 0.9 percent rise in 1949.
That boosted bond prices, which have tumbled the last three days on worries that the Fed might boost interest rates to keep inflation in check. The benchmark 30-year Treasury bond rose $5.94 for every $1,000 valuation. Its yield, which moves opposite the price, fell to 5.61 percent from 5.65 percent on Thursday.
``The bond market and stock market are watching different parts of the report,″ said Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis.
``The stock market is looking at strong economic growth and thinking there may be rising interest rates,″ he said. ``Bonds are looking at the low inflation.″
Declining issues outnumbered advancers by a 4-to-3 margin on the New York Stock Exchange, where volume came to 343 million shares, up from 331 million shares on Thursday.
The Standard & Poor’s 500 index was down 10.36 at 1,234.66, and the technology-heavy Nasdaq composite index was down 37.24 at 2,289.58.
The NYSE composite index was down 3.20 at 584.23, and the American Stock Exchange composite index was up 1.96 at 695.43.
Overseas, Japan’s Nikkei stock average fell 0.71 percent, Germany’s DAX index fell 0.3 percent, Britain’s FT-SE 100 fell 0.5, and France’s CAC-40 fell 1.4 percent.