Tech stocks take a tumble

  • Business
  • Sunday, 05 Sep 2004

By Megan Davies

NEW YORK: US technology shares tumbled on Friday after Intel Corp, the world’s No. 1 chip maker, slashed its revenue forecast, but blue chips were only moderately lower as drug and industrial stocks gained. 

Investors took reassurance from a modest rise in jobs in August, which helped limit losses on the Dow. But trading volume remained thin as Wall Street wound down ahead of the three-day US Labor Day holiday weekend. 

Intel dropped more than 7% after the company cut its revenue and profit-margin forecasts for the third quarter on Thursday, citing weakened demand. The gloom spread to other chip makers, and the Philadelphia Semiconductor Index of 18 tech stocks fell more than 5% to a 14-month low. 

Other disappointments from telecommunications equipment maker 3Com Corp, microchip maker Altera Corp, and microchip technology company Integrated Device Technology Inc added to the gloom. 

“The Intel news was obviously a huge disappointment for technology names,” said Brian Williamson, vice president for equity trading at The Boston Co Asset Management. 

“But the Dow is only off a touch, which is encouraging. The Dow’s being held up by some good moves in some of the majors outside of technology. It could be that people are moving out of tech into other sectors.” 

The Dow Jones industrial average was down 30.08 points, or 0.29%, at 10,260.20. The Standard & Poor’s 500 Index was down 4.68 points, or 0.42%, at 1,113.63. 

The technology-laced Nasdaq Composite Index was down 28.95 points, or 1.55%, at 1,844.48. 

For the week, the Dow gained 0.64%, the S&P rose 0.54%, but Nasdaq slid 0.95%. 

Trading volume was very light, with 924 million shares changing hands on the New York Stock Exchange, way below the 1.4 billion daily average for last year. 

About 1.24 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year. Decliners outnumbered advancers on the NYSE and the Nasdaq by about 5 to 3. 

Among the chip stocks, Intel fell US$1.58 to US$20.05, while Advanced Micro Devices Inc fell 76 cents to US$10.91 and Applied Materials Inc, the world's largest maker of chip-making gear, fell 63 cents to US$15.70. 

Altera was down US$1.25 at US$17.81, 3Com was 47 cents lower at US$4.22, while Integrated Device Technology fell 56 cents to US$9.49. 

Among blue chips showing gains were pharmaceuticals company Merck & Co Inc, up 36 cents at US$45.48, earth-moving equipment maker Caterpillar Inc 41 cents higher at US$73.56 and manufacturer 3M Co up 40 cents at US$83.94. 

Meanwhile, encouraging data on the jobs market gave a boost to some employment-related stocks. 

The Labor Department said employers added 144,000 workers to their payrolls in August and revised upward hiring numbers for the previous two months. The unemployment rate fell to 5.4% from 5.5% in July. 

Shares of Manpower Inc, the world's second-largest staffing company, jumped 4.03%, or US$1.75, to US$45.20. 

In other movers, Kmart Holding Corp rose 3.4% to US$82.08 after it said it would sell 45 stores for US$524mil to Sears, Roebuck & Co. Sears was off 15 cents to US$39.84. – Reuters  

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