Tech stocks up, Dow down

By Elizabeth Lazarowitz

Wall Street Update 

NEW YORK: Technology stocks ended higher on Friday as investors nibbled at companies like Ciena Corp and eyed strong home sales and consumer sentiment data, but nagging uncertainty about interest rates and Iraq weighed on the Dow and the Standard & Poor’s 500. 

A report showing the US economy grew at an unexpectedly slow pace in the first quarter of this year surprised Wall Street. But the report was offset by the other upbeat economic news, and many analysts said the 3.9% annual rate – revised from 4.4% a month ago – was still healthy. 

Investors are fixated on June 30, hoping the day's events will resolve two of the market's main worries – the Federal Reserve's decision on interest rates and the US handover of power in Iraq. 

“There are a lot of positive factors on the one hand, but also a lot of wild cards out there that are creating some uncertainty,” said Ozan Akcin, chief market strategist, Puglisi & Co. 

“Net-net what you get is a flat trading range.” 

The Dow Jones industrial average fell 71.97 points, or 0.69%, to 10,371.84. The Standard & Poor's 500 Index fell 6.33 points, or 0.55%, to 1,134.32. The technology-laced Nasdaq Composite Index rose 9.90 points, or 0.49%, to 2,025.47. 

For the week, the Nasdaq rose 2%, but the Dow fell 0.4% and the S&P 500 fell 0.1%. 

About 1.8 billion shares changed hands on the New York Stock Exchange and 1.9 billion shares were traded on Nasdaq. 

Pfizer Inc dragged on the blue-chip Dow after it announced it would acquire the rights it doesn't already own to a colorectal cancer drug from Sanofi-Synthelabo for US$620mil. Its shares fell 99 cents, or 2.8%, to US$33.82. 

Technology shares, including Ciena and Juniper Networks, boosted the Nasdaq as the companies continued to benefit from plans for hefty spending by Sprint Corp and SBC Communications Inc Ciena rose 8%, or 27 cents, to US$3.76. Juniper rose 73 cents to US$23.89. 

Stun gun maker Taser International Inc surged 19%, or US$6.67 to US$42.09. A Morgan Keegan analyst raised second-quarter and 2005 estimates for Taser, saying a consumer version of the X26 Taser gun may soon be sold by a national retailer. 

On the downside, Titan Corp slid 22%, or US$4.12, to US$14.53 after it said it was unlikely to reach a plea agreement relating to bribery charges before a June 25 deadline set by Lockheed Martin Corp, putting the US$1.64bil merger agreement between the defence companies in jeopardy. Lockheed slipped 14 cents to US$51.97. 

And Paychex Inc, one of the largest US payroll services companies, tumbled 7.6%, or US$2.77, to US$33.92 after it said quarterly earnings fell after it increased a reserve for legal matters at one of its subsidiaries. 

Friday’s annual reconstitution of Russell’s 21 US stock indexes could add to the market’s volatility, analysts said. The Russell 2000 is a leading composite of small-cap stocks compiled by the Frank Russell Co. 

Economic reports were mixed. The final version of the University of Michigan June consumer sentiment index edged up further to 95.6, having jumped to 95.2 in the preliminary release from 90.2 in May. 

Existing home sales for May climbed 2.6% to a record seasonally adjusted annual rate of 6.80 million units, handily beating forecasts. 

Investors have been on edge ahead of the Fed’s decision on interest rates due at the end of its two-day meeting on Wednesday. 

The central bank is widely expected to raise rates by a quarter of a percentage point. Analysts said the surprise downward revision to the first-quarter US gross domestic product helped dampen speculation that the Fed might opt for a more aggressive half-point hike. 

“Nobody wants to screw up their year right now, so we’ll wait,” said Michael Murphy, managing director at Wachovia Securities. 

“I’d rather miss the first 5% on the upside than be early and be wrong.” – Reuters 

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