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Economic Data Hurt Blue Chips, but Techs Climb

Broad market is mixed while Dow slips 0.3% and Nasdaq adds 0.6%. Treasury yields move little. Oil prices gain.

May 02, 2003|From Times Staff and Wire Reports

Blue-chip stocks were wobbly Thursday as weak data fed fears that the U.S. economy still is struggling, but technology shares headed higher on solid earnings or profit forecasts from the likes of USA Interactive and Adobe Systems.

The Dow Jones industrial average swooned 140 points early on, hammered by surprisingly grim U.S. manufacturing and employment reports showing that the end of fighting in Iraq provided no immediate boost to the economy. Even productivity proved weaker than expected in the first quarter, suggesting employers are finding it harder to squeeze more output from their workers.

Still, traders said losses were limited as some investors chose to look beyond the data and pinned their hopes on an eventual economic recovery.

The Dow industrials finished down 25.84 points, or 0.3%, at 8,454.25. The Standard & Poor's 500 index declined less than a point, or 0.1%, to 916.30. The technology-laden Nasdaq composite index advanced 8.25 points, or 0.6%, to 1,472.56.

Winners edged losers by 17 to 16 on the New York Stock Exchange and by 8 to 7 on Nasdaq. Trading was active.

Today, Wall Street will get the closely watched April payroll data. After the market opens, reports on factory orders and durable goods for March also will be available.

On Thursday, a survey from the Institute for Supply Management indicated that manufacturing contracted again in April. Analysts had been looking for a slight increase.

Also, lines at U.S. unemployment offices shortened slightly last week, but the battered labor market still showed little improvement. Initial claims for unemployment benefits totaled a seasonally adjusted 448,000 for the week ended Saturday, down from the previous week but above economists' expectations.

In April, the S&P 500 surged 8.1% as better-than-expected first-quarter earnings bolstered hopes that an economic recovery is in the cards. But so far, there is scant evidence the economy is finding its footing.

"You saw really good performance in the market over the past month, so we're not surprised by profit taking," said John Caldwell, chief equity strategist at McDonald Financial Corp.

Nasdaq did even better than its peers last month, gaining 9.2% as investors gravitated toward tech stocks. After markets closed Thursday, Standard & Poor's raised its rating for the technology sector from "underweight" to "market-weight."

In commodities trading, oil prices rose for a second day on talk that world oil producers may take stronger steps to rein in production as Iraq prepares to restart exports. Crude oil for June delivery gained 23 cents to $26.03 in New York.

The dollar fell again against the euro, while Treasury yields were little changed.

In other highlights:

* USA Interactive, operator of online travel businesses Expedia and Hotels.com, jumped $2.73 to $32.68 after it reported a narrower first-quarter net loss, thanks to consumers flocking to its services despite the war.

* Ford and General Motors fell after the automakers reported that April sales were down from a year ago. Ford fell 32 cents to $9.98. GM ended down 55 cents at $35.50.

* Software maker Macromedia jumped 32% after it said it swung to a fiscal fourth-quarter profit from its year-earlier loss, helped by higher revenue and lower expenses. It rose $4.11 to $16.81 and ranked among Nasdaq's most actives.

* Adobe gained $2.18 at $36.71 after it raised its profit and revenue forecasts for the current quarter, based on strong orders for the new version of its Acrobat software and better-than-expected Japanese business.

* Chubb gained $6.51 to $59.40. The insurer posted better-than-expected quarterly profit, helped by higher premium rates and investment gains, partly offset by heavy executive liability and storm claims.

Market Roundup, C6-7

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