Star-Bulletin news services
Tech worries squelch
dividend excitementThe Dow Jones falls 100 and
the Nasdaq drops 2.2 percent
NEW YORK » Stocks plunged yesterday as weakness in the semiconductor industry and mixed earnings news offset cheer over Microsoft Corp.'s decision to share upwards of $75 billion of its cash reserves with investors. The tech-heavy Nasdaq composite index sank more than 2 percent to its lowest close in nine months, and the Dow Jones industrials lost 100 points.
Microsoft's plan for a stock buyback and an enormous dividend whet buyers' appetites a day ahead of the software bellwether's earnings announcement, and started the session off on a positive note. But trading was subdued by anxiety over earnings reports and worries that a drop in chip orders could portend declining capital spending later in the year.
Even Federal Reserve Chairman Alan Greenspan's mostly bullish testimony before a congressional committee was not enough to keep stocks in positive range.
"Technology stocks are really dragging the overall market down," said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp. "But it's not tech alone. ... We're talking about a market that is more difficult to impress and very easily disappointed."
The Nasdaq slumped 42.70, or 2.2 percent, to 1,874.37 -- its lowest close since Oct. 24. The decline came even as Microsoft, its biggest component, posted a nearly 2 percent advance.
The other gauges saw their worst finishes since May. The Dow Jones industrial average fell 102.94, or 1 percent, to 10,046.13. The Standard & Poor's 500 index declined 14.79, or 1.3 percent, to 1,093.88.
The price of the benchmark 10-year Treasury note fell 732 point and its yield, which moves in the opposite direction, rose to 4.47 percent compared with 4.44 percent late Tuesday. The 2-year note fell 332 point to yield 2.67 percent.
Although most companies have matched or beaten earnings expectations in recent weeks, investors have been reluctant to make commitments because of less-than-stellar outlooks. Analysts say slowing profits, lower consumer spending and uncertainty about inflation, terrorism and the presidential election could combine for a lackluster third quarter.
Many had hoped the Fed chairman would give the market more direction when he spoke before the House and Senate this week. Greenspan offered an upbeat assessment of the economy, but his repeated promise that the central bank would raise rates as aggressively as necessary gave investors some pause.
STOCK QUOTES/CHARTS/DATA
