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Tech Stocks Post Gains, but Blue Chips Decline

In heavy trading, the market pulls back from highs reached early in the day. Nasdaq still closes up 11.71 points.

May 30, 2003|From Times Staff and Wire Reports

Technology stocks climbed Thursday, driving the Nasdaq composite index to its highest close in nearly a year. But blue-chip indexes retreated after five days of gains.

Trading was very heavy, with the Nasdaq market notching its busiest session this year.

In other markets, Treasury bond yields slid, with some maturities hitting generational lows. The dollar sank.

On Wall Street, "the buyers are just taking a little bit of a pause," said Tim Heekin, director of trading at investment bank Thomas Weisel Partners.

The Standard & Poor's 500 index rose as high as 962.09 but pulled back to end down 3.58 points, or 0.4%, at 949.64.

Some analysts said the session was a battle between traders who wanted the S&P to hold above 950 and those who wanted to push it below that level. The 950 mark is seen as an important "technical" threshold, said Marc Pado, market strategist for brokerage Cantor Fitzgerald. "It just became a game to some people," he said.

The Dow Jones industrials rose as high as 8,862.58 but closed with a loss of 81.94 points, or 0.9%, at 8,711.18.

Nasdaq also pulled back from its highs early in the day but still finished up 11.71 points, or 0.8%, to 1,574.95.

The overall market posted gains: Winners beat losers by 6 to 5 on the New York Stock Exchange and by 3 to 2 on Nasdaq.

In the 10 sessions up to Wednesday, the ratio of stocks making new 52-week highs versus new lows on the NYSE was on average about 31 to 1, which some market watchers view as a bullish sign.

Still, the failure of blue-chip indexes to advance Thursday as trading volume surged could be a sign that profit taking may become more intense, some said.

Thursday's economic news was mixed. Consumer spending propelled first-quarter economic growth at a faster pace than previously thought.

Also, new jobless-benefit claims fell last week. But 3.76 million people continued to draw unemployment benefits, pushing the number of people receiving jobless benefits to the highest level in about 18 months.

Yields on Treasury securities fell as some investors again bet the Federal Reserve may cut its benchmark short-term interest rate. The yield on the 10-year Treasury note fell to 3.34% from Wednesday's close of 3.42%. The five-year T-note yield ended at a generational low of 2.26%.

As yields fell, the dollar slumped against the euro.

In other highlights:

* Chip-related stocks helped boost Nasdaq. The SOX index of semiconductor stocks gained 3.1%. Chip equipment maker Novellus Systems climbed $1.10 to $32.17, Intel gained $1.09 to $20.83, and Broadcom rose 51 cents to $23.53.

* Telephone equipment makers rose after Verizon Communications, SBC Communications and BellSouth, the three largest U.S. telephone companies, said they were seeking bids to install fiber optic lines for high-speed Internet services.

Nortel Networks climbed 11 cents to $3.08, and Ciena advanced 11 cents to $5.56. Corning, the world's largest maker of fiber optic cable for telecom networks, added 54 cents to $6.84.

* Eastman Kodak hurt the Dow, losing 82 cents to $30.01. Photo-processing results at retailer Costco, which handles as much as 15% of U.S. film processing under an exclusive contract with Kodak, fell in the third quarter, suggesting a sales decline for Kodak, Smith Barney analyst Craig Ellis said in a note to clients.

* Visx, the largest maker of vision correction lasers, fell 78 cents to $17.35 following financier Carl Icahn's disclosure that he sold 6 million Visx shares after failing to get an associate elected to the company's board.

* Real estate investment trust shares, which have risen sharply in recent weeks, were hit by profit taking. Public Storage lost $1.19 to $33.51, Vornado Realty sank 95 cents to $40.90 and Kimco Realty slid $1.26 to $36.60.

Market Roundup, C6-7

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