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Stocks Pare Early Losses, but Profit Concerns Linger

October 10, 2000|From Times Staff and Wire Reports

Stocks finished with modest losses Monday as persistent concern about corporate profits narrowly prevailed over investors buying shares that have been beaten down in recent weeks.

It could have been much worse: Early in the day, the Nasdaq composite index tumbled nearly 130 points--a loss of almost 4%--before regaining its footing and staging a rally. The tech-laden index ended the day down 5.45 points, or 0.2%, at 3,355.56.

The Dow Jones industrial average seesawed throughout the day before closing down 28.11 points, or 0.3%, at 10,568.43.

Trading was slow as many investors were gone for observance of Yom Kippur and Columbus Day. The bond market was closed.

Nasdaq last week plunged 8.5% as investors fled many tech shares, frightened by apparently weakening earnings prospects.

"The worry is that the [economic] growth rate is coming down and every time that worry intensifies, stocks decline," said Hugh Johnson, analyst at First Albany Corp.

The selling on Wall Street continued early Monday after Asian and European markets fell overnight. Hong Kong's key index slid 3%. The Paris market lost 2.4%.

But U.S. stocks began to rebound around midday. Still, by the end of trading 23 stocks were down on Nasdaq for every 15 that rose. Volume was a modest 1.4 billion shares.

Analysts said the rally began as large institutional investors such as mutual funds took advantage of lower prices to snap up stocks such as Juniper Networks, which ended the day up $9.81 at $199.56 after falling as low as $179.50, and JDS Uniphase, which closed at $93.56, up $2.19, after falling to $85.75.

But tech heavyweights Intel and Microsoft traded down, weighing on both the Nasdaq composite and the blue-chip Dow. Intel dropped 88 cents to $39.06; Microsoft was off $1.38 to $54.19. Cisco Systems also fell, losing $2.50 to $53.69.

Wall Street will be watching closely this week as the third-quarter earnings reporting season begins in earnest. The markets have been jarred in recent weeks by a string of earnings warnings.

Among the high-profile names expected to report earnings this week: General Motors, General Electric, Internet bellwether Yahoo and Motorola.

"We'll probably have a lower trend until we start to get a look at earnings in the middle of this week," said Joseph DeMarco, director of equity trading at HSBC Asset Management Americas Inc. "Investors are concerned, given the moderating economy we've seen."

Investors didn't get much to cheer about from commodity markets Monday. Crude oil prices rose $1 to $31.86 a barrel on expectations that an early spell of cold weather will strain already low U.S. inventories of heating oil.

Oil prices were also driven up by concerns that rising tensions in the Middle East could disrupt supplies.

Among Monday's highlights:

* Internet names led the Nasdaq rebound. Inktomi gained $5.50 to $96.50, Tibco Software jumped $5.38 to $76.63 and Verticalnet surged $3.94 to $25.69.

* Some "old-economy" stocks also saw bargain hunting. Dana gained $1.06 to $22.56, Ingersoll-Rand rose $1.31 to $35.44 and Alcoa rose $1.06 to $28.63.

* Airline stocks were broadly lower as oil prices rose. Delta slid $2.38 to $45.31 and UAL, parent of United, fell $1.19 to $41.19.

But energy stocks rallied again, led by El Paso Energy, up $2.63 to $61.63; Phillips Petroleum, up $2.38 to $63; and Unocal, up $1.25 to $35.25.

* Bank stocks were weak. Citigroup fell 88 cents to $52.63; Bank of America lost $1.06 to $50.56.

* Connetics careened to an 80% loss, dropping $20.19 to $5.31. The biotech company ended plans to seek approval of its drug Relaxin to treat the skin disease scleroderma after a pivotal trial failed to meet its primary goals.

Market Roundup, C12-13

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