Six-day slump for Nasdaq


  • Business
  • Sunday, 10 Aug 2003

By Vivian Chu

NEW YORK: Blue chips ended slightly higher in quiet trading on Friday, buoyed by McDonald's Corp after it reported strong restaurant sales. But weakness in semiconductor stocks sent the technology-heavy Nasdaq down in its sixth straight losing session. 

Falling bond yields eased investors' concerns, traders said. The price of the benchmark new 10-year note rose slightly, sending its yield down to 4.28% on Friday from 4.37% on Thursday, the last day of the government's quarterly refunding effort. 

Last week, the 10-year note's yield hit a one-year high at 4.6%, raising worries that higher interest rates could stifle an economic recovery. 

“Overall sentiment is positive,” said Tim Heekin, director of trading at Thomas Weisel Partners. “People were concerned last week about the bond market action but, overall, they're getting comfortable with the bond market sell-off as it indicates the economy is starting to recover.” 

Higher interest rates are negative for stocks because they make borrowing more costly for consumers and businesses, crimping the chances of an economic recovery. While some data have hinted at a strengthening economy, analysts say a pickup in corporate spending is needed for a sustained rebound. 

The Dow Jones industrial average ended up 64.64 points, or 0.71%, at 9,191.09, according to the latest available data. The broader Standard & Poor's 500 Index rose 3.47 points, or 0.36%, to 977.59. The technology-laced Nasdaq Composite Index ended off 8.15 points, or 0.49%, at 1,644.03. 

For the week, the Dow industrials edged up 0.41%. But the broader S&P 500 slipped 0.26% and the Nasdaq gave up 4.17% – its biggest weekly percentage drop since mid-January. It was the second down week in a row for both the S&P 500 and the Nasdaq. 

A stream of economic data this week showing a rise in productivity and a drop in weekly jobless claims also helped bolster sentiment. 

Next week, investors will sift through a barrage of more indicators, including industrial production, consumer confidence and the consumer price index for more details on the recovery's progress. 

“We've been trading in a tight range for the past six weeks and it's quiet since it’s August. But people are still optimistic about coming back after Labor Day and looking forward to the third quarter,” Heekin said. 

Trading was moderate, with about 1.09 billion shares trading hands on the NYSE and roughly 1.3 billion shares traded on the Nasdaq. Advancers outpaced decliners on the Big Board by about 20 to 12. But on the Nasdaq, decliners edged out advancers by about 16 to 15. 

McDonald's shares jumped after it said sales at hamburger restaurants open for more than one year rose 4.2% in July for the third straight month. Its shares rose US$1.83 or 8.3%, to US$23.89 and led the Dow's percentage gains. 

However, Nvidia Corp rattled technology shares after it warned that its gross margins would be hurt by higher technology costs. Its shares fell US$3.80 or 19.69%, to US$15.50 and were among the Nasdaq's most active issues. 

Nvidia's decline pressured shares of other chipmakers. Intel Corp, the world's top semiconductor maker, fell 41 cents or 1.71% to US$23.58. The Philadelphia Stock Exchange semiconductor index sank 3.11%. 

Media stocks were a bright spot after Univision Communications Inc, the No. 1 US Spanish-language media company, forecast higher earnings and revenue in the current quarter. Shares of Univision rose 13.4% or US$3.89 to US$32.96, pushing the S&P broadcasting index up 0.86%. – Reuters 

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