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Downbeat tech news thwarts stocks' gains

New data suggest the economy is growing, propelling the Dow. But SanDisk's soft sales drag down indexes.

May 20, 2008|Tim Paradis | The Associated Press

Stocks ended mixed Monday after a sign of trouble in the technology sector offset some of the market's enthusiasm about an indication that the economy could still be growing.

The Dow Jones industrial average, which was up by nearly 150 points at mid-session, finished well off its highs after the chief executive of SanDisk said the memory-chip maker had soft sales last month.

Earlier, the Conference Board released its index of leading economic indicators, which rose 0.1% in April after a similar uptick in March. The index, designed to predict economic activity in the next three to six months, bolstered the view of some investors that the overall U.S. economy, although weak, is positioned for recovery.

After five months of declines in the leading indicators, some investors were concerned that March's increase was an anomaly -- so April's advance was met with relief, said Hugh Johnson, chief investment officer at Johnson Illington Advisors.

"Even though you're up only 0.1%, it's very good news that the declining trend may have been reversed," he said.

The Dow rose 41.36 points, or 0.3%, to 13,028.16. The blue chips had been up nearly 150 points at their highs of the session.

Broader stock indicators didn't perform as well. The Standard & Poor's 500 index advanced 1.28 points, or 0.1%, to 1,426.63, and the technology-heavy Nasdaq composite index slumped 12.76 points, or 0.5%, to 2,516.09.

The Nasdaq had been up as much as 0.9% before the news from SanDisk, whose shares finished down $2.42, or 7.5%, at $30.02.

The Russell 2,000 index of smaller companies fell 2.72 points, or 0.4%, to 738.45.

Declining issues narrowly outpaced advancers on the New York Stock Exchange.

Yields on government bonds fell as the rally in stocks cooled. The yield on the benchmark 10-year Treasury note dropped to 3.83% from 3.85% late Friday.

The dollar rose against most other major currencies, while gold prices gained.

Oil futures climbed 76 cents to a record close of $127.05 a barrel on the New York Mercantile Exchange. But stock investors seemed somewhat unfazed as crude failed to top an intraday record set Friday.

In other market highlights:

Financial shares fell after Citigroup analysts reduced earnings estimates for Wall Street's biggest firms. Merrill Lynch lost $1.14, or 2.3%, to $47.71. Morgan Stanley lost $1.01, or 2.1%, to $46.20. Lehman Bros. Holdings fell 85 cents, or 1.9%, to $42.79.

General Motors rose 19 cents to $20.87 after one of its biggest suppliers reached a tentative labor deal that could end a nearly three-month strike. American Axle & Manufacturing Holdings jumped $1.13, or 5%, to $21.42.

Lowe's slipped 64 cents, or 2.6%, to $24.25. The No. 2 home-improvement retailer posted a decline in profit for its fiscal first quarter and cut its earnings forecast for the entire fiscal year.

Campbell Soup tumbled $2.25, or 6.3%, to $33.70. The food company's earnings excluding one-time gains fell short of expectations, in part because of higher ingredient costs.

Amazon.com surged $5.83, or 7.6%, to $82.29. Goldman Sachs added the online retailer to a list of favored stocks.

Electronic Arts dropped $1.17, or 2.4%, to $48.43 after the video game publisher extended for a third time the deadline on its $2-billion tender offer to buy rival Take-Two Interactive Software. Take-Two fell 19 cents to $26.91.

Microsoft fell 53 cents to $29.46 after renewing talks with Yahoo, this time reportedly focusing on a deal short of an outright acquisition. Yahoo rose 2 cents to $27.68.

Pacific Ethanol soared $1.94, or 61%, to $5.14. The Sacramento-based ethanol producer's results excluding a charge topped expectations.

Overseas, key stock indexes rose 0.4% in Japan, 1.1% in Britain, 1% in Germany and 1.3% in France.

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