Related News

Home » Business » Finance

Tech stocks rise but broader market declines

INVESTORS worried about the recession have turned to a strategy of cherry-picking stocks - sending tech shares higher and industrials lower.

The market's concerns yesterday were focused on two fronts: the economic stimulus proposal now before the Senate, and a possible plan to give further aid to the nation's banks. Meanwhile, mostly negative economic data and news of more layoffs helped extend the gloomy mood that gave the market its worst January ever.

Department store operator Macy's Inc. spooked investors by announcing it plans to cut 7,000 jobs or about 4 percent of its work force and reduce its dividend.

President Barack Obama made a fresh appeal to Congress, saying that "very modest differences" over the stimulus plan should not delay its passage. The stimulus package that passed the House last week without a single Republican vote now goes to the Senate. Republican lawmakers argue that the plan is too expensive and doesn't include adequate tax cuts.

"I think it's got legislative paralysis," David Waddell, senior investment strategist and chief executive of Waddell & Associates said of the market. "Everything occurring right now is predicated upon what the current conversation is in Washington, which makes it a very difficult market to evaluate."

The market was also eyeing reports that Treasury Secretary Timothy Geithner is expected to outline a bank rescue plan next week, said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

"The market is hoping for some resolution to the banking crisis," he said. Investors have been concerned that unrelenting loan losses could lead to a major bank failure.

All the uncertainty yesterday, which also included still-to-be-released fourth-quarter earnings reports, weighed on the overall market. But tech stocks were one of the few bright spots.

The Nasdaq composite index rose 18.01, or 1.22 percent, to 1,494.43.

"Technology is one of the sectors that people, businesses are always going to need," said Keith Springer, president of Capital Financial Advisory Services. "There's a feeling that corporations are going to continue to invest in technology."

Microsoft Corp. jumped 73 cents, or 5.7 percent, to US$17.83, and Intel Corp. added 73 cents, or 5.7 percent, to US$13.63.

The Dow Jones industrial average, meanwhile, fell 64.03, or 0.80 percent, to 7,936.83, hurt by sliding industrial, energy and financial stocks. The Standard & Poor's 500 index slipped 0.45, or 0.05 percent, to 825.43. Both indexes had their worst January ever as investors, increasingly uneasy about the economy, gave back the gains from Wall Street's late-2008 rally.

Stocks fell in the early going yesterday after the Institute for Supply Management said manufacturing activity improved during January from a record low, but still fell for the 12th straight month as the recession spread around the world.

"People are waiting for indications that things are getting better," said John Massey, senior vice president and portfolio manager at AIG SunAmerica Asset Management. "One better-than-expected report does not make a trend. People have to have more than a hunch that things are going to get better."

Meanwhile, the Commerce Department said personal spending fell for the sixth straight month in December by 1 percent. Analysts had predicted a decline of 0.9 percent. Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous.

The department also said construction spending fell 1.4 percent in December, slightly worse than the 1.2 percent economists expected.

News of more layoffs further discouraged investors. Besides Macy's, Morgan Stanley may cut up to an additional 1,800 jobs, according to a report in The Wall Street Journal. Morgan Stanley slashed about 7,000 jobs last year.

Analysts expect trading to remain fractious again this week as investors await more details on the stimulus package, as well as the government's January jobs report, due Friday morning.

Investors will also be looking to more corporate earnings reports for an indication of the economy's health. While a few reports have exceeded the market's expectations, the majority have been disappointing.

Toy maker Mattel Inc. said its fourth-quarter profit skidded 46 percent, well below analysts' estimates, as the recession curbed consumer spending.

Health insurer Humana Inc. reported that its fourth-quarter profit dropped 28 percent, driven by higher claim expenses from its stand-alone Medicare prescription drug plans and a plunge in its commercial business.

Mattel shares plunged US$2.29, or 16 percent, to US$11.90. Humana jumped US$2.20, or 5.8 percent, to US$40.13.

Macy's dropped 36 cents, or 4 percent, to US$8.59.

Among financial stocks, Bank of America Corp. tumbled 58 cents, or 8.8 percent, to US$6. JPMorgan Chase & Co. shed 32 cents, or 1.3 percent, to US$25.19.

The Russell 2000 index of smaller companies rose 6.08, or 1.37 percent, to 449.61.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.33 billion shares.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.72 percent from 2.85 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.26 percent from 0.22 percent late Friday.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend