Techs make small gains,
but blue chips pull back

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By Lisa Singhania
Associated Press

NEW YORK >> Bargain hunting lifted tech stocks moderately higher today, but the overall market fell on news that yet another company, Knight Trading, was being investigated by the government.

Analysts attributed the gains to a rebound from yesterday's big selloff, rather than any dissipation of the chronic malaise that has clouded trading for weeks now.

"This is a really nervous market. We have our government saying we're pretty sure there's going to be another terror attack and we've got continuing Enron-type issues," said Mike Weiner, managing director of equities at Banc One Investment Advisors. "You've got to have a sense of trust to buy equities, and a lot of people don't have that right now."

Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to 1.47 billion shares, compared with 1.30 billion shares yesterday.

The Dow Jones industrial average closed down 21.95, or 0.2 percent, to 9,687.84, extending a 215-point drop yesterday that sent the index to its lowest level since early February.

Broader stock indicators fared better. The Nasdaq composite index gained 15.56, or 1.0 percent, to 1,578.12, after closing yesterday at its lowest level since Oct. 2. The Standard & Poor's 500 index was little changed, rising 0.01 to 1,040.69. The Russell 2000 index fell 0.63 to 473.76.

The uneven close was in keeping with the choppy nature of trading all day. At various points during the session, all three major indexes were higher, but ultimately couldn't keep their gains.

The price of the Treasury's 10-year note fell 1/16 point today, while its yield rose to 5.01 percent from 5.00 percent late yesterday. Two-year Treasury notes were up 1/32 point and yielded 3.10 percent, down from 3.13 percent late yesterday.

Knight Trading slid $1.28, or 21.6 percent, to $4.64 on news that the Securities and Exchange Commission and National Association of Securities Dealers are looking into whether the trading firm made illegal trades during the technology boom.

The firm acknowledged today that a former employee has accused it of improper trading practices during the tech boom, prompting the investigation. The company denies any wrongdoing.

"The allegations are completely unfounded. The very private arbitration case was made public by an unhappy ex-employee. We are comfortable that we have not done anything wrong. ... We will be totally vindicated," Chief Executive Thomas M. Joyce said.

The SEC declined to comment, and the NASD did not immediately return a phone call.

The probe is a result of a sealed arbitration complaint filed late last year by Robert Stellato, the former head of Knight Trading's institutional trading desk, Joyce said.

Jersey City, N.J.-based Knight Trading is the biggest trader of stocks listed on the Nasdaq.

General Motors fell $1.80 to $59.45 after raising its estimates for the rest of the year but reporting a 12 percent decline in total U.S. vehicle sales during May.

And Bristol Myers Squibb dropped $1.18 to $26.65 after 29 states filed a lawsuit charging the drug company improperly delayed generic competition for its Taxol cancer drug.

Selective bargain hunting lifted some stocks.

Tyco advanced 72 cents to $16.77, reversing some of the selloff that followed news yesterday that CEO Dennis Kozlowski had resigned because of a sales tax violations scandal.

Microsoft rose 56 cents to $49.98, recovering some of its decline yesterday on word it had settled an accounting issues dispute with the SEC.

Other tech gainers included Cisco, up 75 cents to $16.08, Dell Computer, up 75 cents to $26.93, and Intel, up 88 cents to $27.50.

And energy company El Paso, which fell sharply yesterday on word a top executive had committed suicide, climbed $2.10 to $24.05.

Still, the overall mood of the market remained negative. Analysts say the combination of accounting scandals, questions about analysts' ethics, lackluster earnings and political crises overseas are taking a toll on Wall Street. After two years of losses, investors have become extremely cautious, unwilling to buy unless they're sure that their stock purchases will pay off sometime soon.

Even the market's recent selloff, which sent stocks to levels not seen in months, has failed to draw new money in.

"People invest when they're excited and happy and feeling trust toward the market, and they just don't feel that way right now," said Ralph Acampora, director of technical research, Prudential Securities. "Look at all the uncertainty overseas. People are also disappointed that there's been no follow-through on economic news and earnings have come and gone with nothing happening. And then all this nonsense about analysts and ethics. It's sad."

Overseas, stocks fell sharply. Japan's Nikkei stock average dropped 2.1 percent. In Europe, France's CAC-40 slid 3.8 percent, and Germany's DAX index fell 2.6 percent.

The London Stock Exchange was closed for a holiday, and will reopen tomorrow.