Dow falls 42
as tech stocks tumble

NEW YORK -- Technology stocks led a second day of declines on Wall Street today as investors backed off the record-breaking gains of the past two weeks.

Analysts said the decline, following a drop in yesterday's Dow, marked the predictable end of a record-breaking streak that put the Dow above 7,400, 7,500, 7,600 and 7,700 in less than two weeks.

"The market, given the hellacious run that it has had, is susceptible to a little bit of the break," said Charles White, portfolio manager at Avatar Associates in New York. "Even God rested on the seventh day."

The Dow Jones industrial average fell 42.07 points to close today at 7,718.71. Decliners narrowly beat advancers on the New York Stock Exchange, with 1,317 down, 1,218 up and 848 unchanged. NYSE volume was 491.68 million shares vs. 542.97 million yesterday.

The Standard & Poor's 500 list fell 5.36 to close at 889.06, snapping an eight-session streak of record highs. The NYSE index was down 1.68 to 463.41. The Nasdaq index fell 10.68 to 1,432.43, ending three consecutive sessions of record closes. Bucking the trend, the American Stock Exchange index edged up 0.11 to 625.97.

The overall decline was led by news of lower earnings expectations from disk-drive maker Seagate Technology Inc. The drop carried over to bellwether tech stocks, with computer chip maker Intel Corp. and software giant Microsoft Corp. both ending down for the day. Oracle Corp.'s shares fell even thought its earnings met analyst's expectations.

"It's just had a little bit of a dampening effect on the overall market," said Ned Collins, head of stock trading at Daiwa Securities America. "With the market having been up 350 points last week, I don't think it's any big surprise."

The lower overall market came despite reports suggesting inflation remains under control. Inflation erodes the value of stocks and other investments.

In its latest Beige Book report, the Federal Reserve said today the domestic economy continued to expand in May and early June but showed signs of weaker consumer spending.

A government report released today showed the productivity of American workers rose at the fastest rate since 1993 during the first three months of the year. Economists cite productivity improvements as an important factor in keeping a lid on inflation because businesses can raise wages without raising prices.

Securities analysts said the market is already convinced that the Federal Reserve will not raise interest rates when it meets July 1-2. The central bank raised rates in March as a pre-emptive strike against inflation.

Today's dip followed an 11.31 point decline that brought the Dow to 7,760.78 at the close of trading yesterday.