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Late tech sell-off
erases day's gainsThe Dow and S&P neared
2 1/2-year highs before heavy selling
NEW YORK >> A late-day selloff in technology issues ahead of Hewlett-Packard Co.'s earnings led Wall Street lower yesterday, wiping out gains fueled by solid earnings and economics news.
The Dow Jones industrial average and Standard & Poor's 500 index were flirting with 2 1/2-year highs before heavy selling in the last hour of trading sent prices skidding.
"It could be programmed trades executing when stocks hit those higher levels, or just some profit-taking," said Kevin Caron, market strategist for Ryan, Beck & Co. "There's no real reason for the drop other than that."
The Dow closed down 7.26, or 0.1 percent, at 10,664.73. The blue chips had risen more than 70 points earlier, surpassing their 2 1/2-year high of 10,737.70, reached Feb. 11.
Broader stock indicators also dropped, with smaller stocks and technology shares slumping as investors moved to more defensive positions. The tech-dominated Nasdaq composite index dropped 30.51, or 1.5 percent, to 2,045.96. The S&P 500 was down 4.76, or 0.4 percent, at 1,147.06.
The price of the Treasury's 10-year note closed up 18 point, while its yield fell to 4.03 percent from 4.05 percent Wednesday. Two-year Treasury notes rose 1/32 point and yielded 1.65 percent, down from 1.68 percent Wednesday.
Hewlett-Packard, a bellwether for the tech sector, announced its quarterly earnings after the close of trading, meeting analysts' profit estimates of 35 cents per share. The stock closed up 35 cents at $23.86, but shed 61 cents in after-hours trading.
The day's economic news was surprisingly good. Unemployment claims fell by a seasonally adjusted 24,000 to 344,000 for the week ending Feb. 14, the lowest level since Jan. 24, giving investors hope that corporate finances were secure enough to prevent more large-scale layoffs.
"This is definitely a welcome sign," Caron said. "It's just one week and one data point, but the overall trend is deceleration in jobless claims and a rise in new jobs, and this fits in with that."
Investors were also cheered by a larger-than-expected rise in the Index of Leading Economic Indicators, the closely watched forecasting gauge. The index rose 0.5 percent in January, 0.2 percentage point higher than Wall Street estimates.
"I think the theme for the market in February is resiliency," said Brian Belski, market strategist at Piper Jaffray. "Considering the earnings we had in January and the strong performance we had at the end of the year, more than anything it's surprising people on the upside."
Wal-Mart Stores Inc. jumped $1.18 to $58.38 after reporting strong fourth-quarter earnings in line with analysts' expectations.
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