Star-Bulletin news services
Blue chips fall,
but techs gain
NEW YORK >> Profit warnings from Eastman Kodak and Clorox unnerved Wall Street yesterday, prompting investors to cash in profits from two days of gains. But technology issues rose modestly, lifted in part by brokerage upgrades of three semiconductor companies.
While the warnings raised fears that investors had misread signs of economic recovery, some pullback is to be expected following more than three months of rallies.
Most market watchers remain optimistic about the stock market's long-term prospects, saying the latest rally has more staying power than advances that fizzled in the bear market.
"Right now, indications are that this could be more than a bear market rally. The jury is still out, but I think for the bulls there have been some wins, (like) the S&P 500 taking over the 1,000 area," said Todd Salamone, director of trading at Schaeffer's Investment Research in Cincinnati.
Declining issues outnumbered advancers slightly more than 3 to 2 on the New York Stock Exchange. Consolidated volume reached 1.87 billion shares, matching the number of shares exchanged Tuesday.
The Dow Jones industrial average closed down 29.22, or 0.3 percent, at 9,293.80. The declined followed a two-day gain of 205.90, nearly all of which resulted from a big rally on Monday.
The market's broader gauges were mixed. The tech-focused Nasdaq composite index rose 8.70, or 0.5 percent, to 1,677.14. But the Standard & Poor's 500 index declined 1.57, or 0.2 percent, to 1,010.09, having finished Monday's session at its highest close since June 19, 2002, when it stood at 1,019.99. And the Russell 2000 index fell 0.50, or 0.1 percent, to 457.51.
The price of the Treasury's 10-year note closed down 13/16 point, while its yield rose to 3.36 percent from 3.26 percent yesterday. Two-year Treasury note prices fell 1/32 point, while their yield was unchanged at 1.23 percent.
Technology stocks have been the biggest winners, which analysts attribute to signs that capital spending on tech products is increasing. Many market experts believe that a rebound in the market and the overall economy is contingent upon a resurgence in tech spending.
Brokerage house upgrades of semiconductor companies also helped the tech sector to advance yesterday.
PMC-Sierra rose 93 cents to $13.33, Vitesse Semiconductor advanced 56 cents to $5.62, and Applied Micro Circuits inched up 5 cents to $6.27. Lehman Brothers raised its rating on the three chip makers to "equal-weight" from "underweight."
But blue chip issues fell on disappointing earnings news.
Dow industrial Kodak dropped $3.22 to $28.77 after cutting its second-quarter earnings outlook.
Clorox fell $2.96 to $42.29 after reducing its quarterly and annual profit estimates.
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