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Dow, Nasdaq Diverge in Flight to Largest Techs

March 21, 2000|From Times Wire Services

The Nasdaq composite index fell sharply Monday as investors once again moved money out of newer technology stocks and into shares of more established computer makers and traditional industrial companies.

Nasdaq tumbled 188.13 points, or 3.9%, to close at 4,610. The Dow Jones industrial average rose 85.01 points, or 0.8%, to 10,680.24. The Standard & Poor's 500 fell 7.84 points, or 0.5%, to 1,456.63, and the Russell 2,000 index of smaller companies plummeted 25.59 points, or 4.5%, to 549.20, dragged down by MicroStrategy's accounting woes.

Biotechnology stocks contributed heavily to Nasdaq's weakness as investors took profits from the sector's big run-up this year. The Amex biotech index more than doubled between Dec. 1 and March 7, leaving those companies vulnerable.

Amgen fell $5.13 to $58 after Barron's detailed its upcoming patent infringement trial. President Clinton's announcement last week that he wants to make some genetic research openly available has also unsettled many investors, analysts said. Immunex slid $23.88 to $150 and Biogen slid $5.63 to $79.25.

The Dow and Nasdaq diverged as investors drew money out of lesser-known names in the software and biotechnology groups and poured it into the largest tech companies. Leading the Dow's advance were Hewlett-Packard, up $5 to $144; Intel, up $5.13 to $135; and IBM, up $2.75 to $112.75.

"Given the very high prices of many of these stocks, people who want to be heavily invested in technology are believing that maybe they should stick with the tried and true," said Richard A. Dickson, a technical analyst at Scott & Stringfellow in Richmond, Va.

Internet retailers closed mostly lower after Barron's reported this weekend that dozens of prominent companies are strapped for cash. eased 63 cents to $64.19 and EToys fell $1.69 to $11.94.

While those stocks fell, investors sought out a range of blue chips. United Technologies rose $1.50 to $56.13, AT&T rose $3.56 to $56.75 and DuPont rose $2.06 to $54.63.

Trading was relatively calm on the eve of today's Federal Reserve's Open Market Committee meeting. Many on Wall Street expect the Fed to raise interest rates by a quarter-percentage point, the fifth increase since last June. Higher interest rates generally send stocks lower because they cut into corporate profits.

Bond yields were little changed.

Among the other equity highlights:

* Software maker MicroStrategy lost more than half its value after the company revised its financial results for 1998 and 1999, plummeting $140 to $86.75.

* Tech stocks with steep valuations got punished. Veritas slid $21.88 to $142.50, Qualcomm fell $6.63 to $129.63 and JDS Uniphase dropped $8.69 to $121.38.

* Bank stocks fell as investors bet the Fed will continue to raise interest rates after this week. J.P. Morgan sagged $2.38 to $123.44, Bank One slid $1.75 to $25.88 and Fifth Third Bancorp dropped $3.38 to $56.88.

* Oil service shares declined as crude oil fell to a three-week low on expectations OPEC will decide next week to increase output. Schlumberger dropped $4.06 to $70.25, Smith International fell $3.75 to $65.63 and Halliburton fell $2.19 to $36.19.

* Eastman Chemical rose $3.75 to $43.56 after the company said its first-quarter profit will be above 65 cents a share, versus an average estimate of 43 cents, according to First Call. Other chemical companies climbed, including Dow Chemical, up $1.50 to $108.

* American Italian Pasta rose $2.31 to $22.13 after saying it plans to buy back as many as 1 million shares of its common stock during the next year.

* Avista gained $4.75 to $35.75 as the utility said it received a patent for its fuel-cell power system.

* Walt Disney rose $2.63 to $39.44 as the entertainment company was raised to "outperform significantly" from "outperform" by Schroder Securities.

* Global Crossing fell $5.19 to $47.44. The telecommunications company said it filed with U.S. regulators to sell as much as $8 billion of securities in the next two years.

* Among other Southern California stocks, Collateral Therapeutics rocketed $14.44 to $40.19 on positive heart-study data. Aurora Biosciences dived $23.50 to $51.88 and Techniclone fell $2 to $6.06 in the biotech sell-off.

Overseas, Japan's key index rose 1.6%, Germany's rose 2.1%, Britain's rose 1% and France's rose 0.8%.

Market Roundup, C14

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