Sun, Jul 18, 2004 - Page 10 News List

US stocks fall as traders start to sell technology shares


US stocks fell Friday, hit by a sell-off in technology shares, as investors' worries about slowing growth in the economy and corporate profits overshadowed upbeat earnings from tech bellwether IBM.

Weakness in semiconductor-related companies helped push the NASDAQ Composite to its lowest close in two months.

PMC-Sierra Inc, which designs chips for telecommunications, was among them, as investors expressed disappointment with the company's revenue forecast.

Rising oil prices also weighed on Wall Street sentiment. Oil jumped to a 6-week high on worries about possible sabotage in Iraq that could put a crimp in supply.

The latest economic data did little to quell speculation that the economy's red-hot rebound is beginning to cool.

One report showed consumer sentiment rose less than expected in July, and another showed the pace of consumer price gains slowed in June.

"It's all symptomatic of a slowing economic pace. I think that's what's worrying everybody," said Larry Wachtel, senior vice president and market analyst at Wachovia Securities.

"The second-quarter earnings were mixed. They certainly weren't the turn-on everyone had hoped they would be," Wachtel said.

The Dow Jones Industrial Average fell 23.38 points, or 0.23 percent, to 10,139.78, and the Standard & Poor's 500 Index dropped 5.30 points, or 0.48 percent, to 1,101.39.

The technology-laced NASDAQ Composite Index fell 29.56 points, or 1.55 percent, to 1,883.15, its lowest close since May 17.

Trading was active, with about 1.4 billion shares traded on the New York Stock Exchange and 1.8 billion shares traded on NASDAQ.

For the week, the S&P 500 fell 1 percent, racking up its fifth consecutive week of losses.

The Dow fell 0.7 percent, its fourth straight week of declines, and the NASDAQ Composite fell 3.3 percent, its third straight down week.

International Business Machines Corp. underpinned the Dow after posting better-than-expected quarterly results Thursday. Its shares rose US$0.26 to US$84.28.

Dell, the world's largest personal computer maker, climbed after it raised its quarterly profit outlook as overseas sales improved and its tax rate declined. It gained US$0.55, or 2 percent, to US$35.42.

Boston Scientific Corp, however, plunged after it reported it is expanding its recall of its popular heart device because of a malfunction.

Its shares, which were halted most of the day, fell US$3.09, or 7.6 percent, to US$37.40.

Johnson & Johnson, which makes a competing device, was the Dow's biggest percentage gainer with a rise of US$1.45, or 2.6 percent, to US$56.80.

Semiconductor shares, which have been battered in recent weeks amid worries about lackluster demand, fell further, pushing the Philadelphia Stock Exchange's semiconductor index down nearly 2 percent.

PMC-Sierra, which said it expects its revenue to be flat to up slightly in the current quarter over the last, fell US$1.29, or 11 percent, to US$10.46.

Mobile phone maker Motorola Inc fell sharply after analysts at Smith Barney Citigroup and Lehman Brothers cut their investment ratings on the company's stock. Motorola's shares fell US$0.78, or 5 percent, to US$15.80.

Motorola's spinoff, Freescale Semiconductor Inc, priced its nearly US$1.6 billion initial public stock offering at the low end of its estimated range, which it had already slashed because of a difficult environment for chip stocks. Shares of Freescale, which priced at US$13 a share, rose 8 percent in their market debut to US$14.02 on the NYSE.

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