Sun, Aug 05, 2001 - Page 10 News List

Intel, Microsoft and IBM shares drop

US EQUITIES Chipmakers and computer-related shares fell after seven consecutive days of gains. But the lack of an economic recovery eventually made investors jittery

BLOOMBERG , NEW YORK

US stocks fell as semiconductor shares snapped a seven-day winning streak. Other computer-related stocks, including Microsoft Corp, International Business Machines Corp and Sun Microsystems Inc, also declined.

A report of lower-than-expected US unemployment in July wasn't enough to widen the NASDAQ Composite Index's first weekly gain since July 13, investors said.

"I don't think you'll get any kind of sustainable rally until there is some real, solid, hard evidence that the economy is stabilizing and profits are improving," said James Tillar, a money manager at Dean Investment Associates, which oversees US$1.4 billion in Dayton, Ohio.

The NASDAQ fell 21.05, or 1 percent, to 2,066.33. The Standard & Poor's 500 Index dropped 6.40, or 0.5 percent, to 1,214.35. The Dow Jones Industrial Average declined 38.40, or 0.4 percent, to 10,512.78.

The NASDAQ gained 1.8 percent for the week, the S&P 500 rose 0.7 percent and the Dow climbed 0.9 percent. The market benchmarks swung between gains and losses as optimism about a possible economic turnaround clashed with concern that profit expectations are still too high.

"The market is going to bounce all over the place until it becomes very clear that the economy is stabilizing or that we have lower to go," said Tillar, who has been buying shares of Interpublic Group Cos, the largest advertising agency.

Six stocks fell for every five that rose on the NASDAQ Stock Market, while 12 declined for every 11 that advanced on the New York Stock Exchange. Some 929 million shares traded on the Big Board, 19 percent below the three-month daily average.

The Philadelphia Semiconductor Index fell 2.4 percent, its first loss in eight days. The 20 percent rally through yesterday, the longest in almost five years, was buoyed by a Merrill Lynch & Co report on Wednesday that said the worst may be over for the industry, followed by Intel Corp Chief Executive Craig Barrett's comments yesterday that the computer industry will recover this year.

Major indexes

* The NASDAQ fell 21.05, or 1 percent, to 2,066.33.

* The Standard & Poor's 500 Index dropped 6.40, or 0.5 percent, to 1,214.35.

* The Dow Jones Industrial Average declined 38.40, or 0.4 percent, to 10,512.78.


Those who are selling "are less sanguine about an economic recovery," said Dan Rivera of American Express Asset Management, which oversees US$40 billion.

Rivera owns shares of Intel, Texas Instruments Inc, Xilinx Inc and Applied Materials Inc. He's holding onto the stocks because "we're big believers in an economic recovery." Intel, the biggest chipmaker, lost US$0.43 to US$31.68 after a three-day, 11 percent surge.

Among other semiconductor-related stocks, Texas Instruments fell US$0.65 to US$37.50; Xilinx shed US$1.89 to US$41.45; Applied Materials fell US$0.40 to US$49.60; and Micron Technology Inc. slipped US$1.45 to US$43.45.

Software maker Microsoft fell US$0.56 to US$66.89. IBM, the biggest seller of computers and related services, lost US$0.71 to US$108.09. Sun Microsystems, whose server computers run Internet sites and corporate networks, shed US$0.45 to US$17.72.

Among the most-active stocks, phone-equipment maker Lucent Technologies Inc rose US$0.29 to US$6.60, and networking-equipment maker Cisco Systems Inc lost US$0.20 to US$20.05.

Cisco reports earnings after exchanges close Tuesday, and some analysts said that the company may signal profit forecasts for the current quarter are too high.

Motorola Inc fell US$0.77 to US$18.63 after Morgan Stanley Dean Witter & Co analyst Alkesh Shah said shares of the No. 2 mobile-phone maker "are beginning to get ahead of themselves" as the economic slowdown could force sales forecasts lower. Shah cut his rating to "outperform" from "strong buy." Oil stocks fell on concern that the slowing world economy is crimping energy demand, making it more difficult for companies to meet sales and profit targets.

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