Data indicating consumer spending is puffing up the economy was driving a tech selling spree at midday Monday. The Nasdaq fell 135.20 to 3,751.87, and the Dow Jones industrial average gained 13.03 to 10,751.90.
The Inter@ctive Week @Net Index lost 21 to 500.34.
On the economic front, consumer spending posted its strongest annual growth in a decade, igniting fears of inflation. Personal income rose 0.3 percent in December, while spending gained 0.8 percent, the Commerce Department said, in line with forecasts. The amount Americans put into savings reached an all-time low of 1.5 percent,
For the year, income gained 5.9 percent, and spending jumped 6.9 percent, the strongest yearly gain since a 7.2 percent jump in 1989. The savings rate was a record low of 2.4 percent using the revised measure.
Now that everyone is expecting the Federal Reserve's to raise short-term interest rates at its Wednesday meeting, it's only a matter of how much. The Fed funds rate, currently at 5.5 percent, establishes consumer and commercial lending rates for banks.
3Com Corp.(Nasdaq: COMS) defied the downward trend and advanced 5 percent, or 2 3/8 to 48 15/16 on high volume after it announced the terms of Palm Inc.'s IPO, and received an upgrade from SG Cowen.
Musicmaker.com (Nasdaq: HITS), down 9/32 to 6 13/32 said it has retained an investment bank to examine strategic alternatives following the recent EMI-Time Warner and Time Warner-America Online deals.
FreeMarkets, Inc. (Nasdaq: FMKT) fell 33 5/16 to 238 1/2 after it beat First Call's expected loss of 31 cents a share. The business-to-business online auctioneer also reassured investors that the departure of customer General Motors won't impact revenue or operations in 2000.
Amazon.com Inc. (Nasdaq: AMZN) lost 2 to 59 11/16 after it announced the company would take a 5 percent stake in Audible (Nasdaq: ADBL), up 1 1/2 to 16. Audible also reported a smaller than expected loss. Yahoo! (Nasdaq: YHOO) fell 6 1/2 to 307.
America Online Inc (NYSE: AOL), down 2 7/16 to 56 7/16 has signed deal with Netcentives Inc (Nasdaq: NCNT), up 4 5/8 to 66 1/2, and American Airlines to establish two reward-based customer loyalty programs.
E-business growth will be crucial to a quick turnaround at IBM (NYSE: IBM), said Chairman and Chief Executive Lou Gerstner in an internal memo issued after the company announced its lackluster fourth-quarter earnings on Jan. 19. Shares fell 9/16 to 111.
Dell Computer Corp. (Nasdaq: DELL) rose 1/8 to 37 3/8 and Compaq Computer Corp. (NYSE: CPQ) rose 1/16 to 27 9/16.