A biased Federal Open Market Committee was all the excuse the market needed to sell off Tuesday afternoon.
After rising for the first four and a half hours of the session, market indices plunged immediately after the Federal Reserve announced it would keep interest steady, but adopt a bias toward tightening. Thanks to a recovery in the final minutes, the tech-heavy Nasdaq Composite Index ended the session up 3.70 to 2,799.67.
The S&P 500 fell 3.25 to 1,301.35, and the Dow Jones Industrial Average slid 0.64 to 10,400.59. Inter@ctive Week's @100 Index edged up 9.23 to 5,038.39.
"The tightening bias doesn't do a lot to clear the air of uncertainty ahead. While interest rates stay the same, the anxiety level appears to increase," said Alan Ackerman, the senior vice president and market strategist at Fahnestock & Co.
The largest corporate merger to date dominated tech stock traders' thinking in the morning and early afternoon. An MCI Worldcom (Nasdaq: WCOM) agreement to buy Sprint (NYSE: FON) for $115 billion in stock sent Worldcom down 3 11/16 to 67 15/16 as the most active stock on U.S. markets. Although the deal represents a 33 percent premium to Sprint's closing price Monday, Sprint shares fell 2 to 58 7/8 after Federal Communications Commission Chairman William Kennard spoke skeptically about the deal.
Speculation focused on whcih communications companies would be involved in the next merger or buyout. Qwest Communications (Nasdaq: QWST) picked up 9/16 to 33 1/4, Global Crossing (Nasdaq: GBLX) gained 3/16 to 25 3/16, and wireless provider Nextel Communications (Nasdaq: NXTL) rose 1 3/4 to 77 1/8.
AT&T (NYSE: T) advanced 1 3/8 to 45 1/8.
A pair of companies made their public trading debuts Tuesday. AltiGen Communications (Nasdaq: ATGN), which makes business phone systems that work with both IP and traditional switch networks, picked up 6 5/8 to 16 5/8. XM Satellite Radio Holdings (Nasdaq: XMSR) saw a literally flat first day, unchanged at 12.
Apple Computer (Nasdaq: AAPL) gained 3 3/8 to 67 15/16 after the company unveiled the latest iteration of the MacOS and new iMacs priced as low as $999.
A product upgrade also boosted America Online (NYSE: AOL), up 4 1/2 to 113 5/8. The world's largest ISP formally unveiled the next version of its software.
IT services giant Computer Sciences Corp. (NYSE: CSC) tumbled 8 1/4 to 60 1/2 following a Lehman Bros. downgrade.
Concur Technologies (Nasdaq: CNQR) plunged 20 1/16 to 12 13/16 on volume of 14.7 million shares. The vendor of business automation software warned fourth quarter revenue would fall short of analyst estimates.
Fax-to-e-mail converter eFax.com (Nasdaq: EFAX) increased 2 1/8 to 11 1/2. The company unveiled a redesigned website and announced a deal that lets WebTV subscribers receive eFax messages.
Electronics for Imaging (Nasdaq: EFII), a maker of systems for desktop publishing, rose 3 1/2 to 56 7/8 on positive analyst comments. Morgan Stanley Dean Witter upgraded the stock to "buy" from an "outperform", and Prudential Securities reiterated a "strong buy" rating.
Among other heavily traded technology stocks, Microsoft (Nasdaq: MSFT) dropped 3/4 to 91 13/16, Cisco Systems (Nasdaq: CSCO) advanced 1 1/8 to 71 5/8, Dell Computer (Nasdaq: DELL) gained 9/16 to 43 13/16, and Intel (Nasdaq: INTC) retreated 13/16 to 76 3/16.>