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Nasdaq recovers from early beating, but Dow falters

U.S. markets struggle to regain early losses, as the Nasdaq composite index closes slightly ahead of yesterday.

U.S. markets struggled to regain early losses, as the Nasdaq composite index closed slightly ahead of yesterday.

The Nasdaq fell about 70 points in early trading but fought back to close at 3,897.44, up 31.80 from yesterday. The Standard & Poor's 500 index dropped nearly 30 points earlier in the day but regained some losses and finished at 1,451.34, down 8.56 from yesterday.

The Dow Jones industrial average fell 101.37 to close at 10,687.92. A leading decliner was Alcoa, which lost $2.81, or 10 percent, to close at $25.19. The Dow traded as low as 10,567.32, down more than 220 points.

Large-cap stocks helped bring the Nasdaq back from early stumbles.

At the end of regular trading, Intel closed up $2.69 at $63.06. Cisco Systems rose $1.13 to $63.13, and Dell Computer moved up $2.25 to $38.56. Microsoft dipped 75 cents to $64.25, and Qualcomm fell $2.45 to $75.05.

"Right now, the path of least resistance is for the markets to head down," said Ken Sheinberg, head of listed trading at SG Cowen. Sheinberg said looming concerns in the broader economy and the threat of disappointing third-quarter earnings have sapped investor enthusiasm.

In addition to earnings warnings, investors are worried that rising oil prices might pinch corporate profits. Oil prices set 10-year highs today, after a report showed U.S. crude oil in short supply.

Also weighing on stock prices is the falling value of the euro, the unified currency of western European countries. As the relative value of the dollar increases, economists worry that U.S. products could be more expensive abroad and the nation's trade deficit could widen.

But Alfred Goldman, chief market strategist at A.G. Edwards, dismisses these surface explanations as partial excuses.

"Investors are hung up today on old news," Goldman said. "The reality is that (the markets) had a major rally in August, and we were due for a correction."

The Nasdaq rose nearly 12 percent in August and has declined about 7 percent so far this month.

Goldman believes that third-quarter earnings will eventually help stabilize the market and send it higher. He added that earnings will grow 15 percent this year from the previous year, and 2001 earnings will grow about 12 percent.

Some analysts say that the high price of oil might not effect the economy as much as it has done in the past because the United States increasingly depends more on service and technology than on manufacturing.

"Tell that to the plastics industry," said Bill Allyn, head of block trading at Jeffries & Co. Allyn agrees that oil may be less of an issue these days, but notes some sectors will feel a pinch.

While tech companies aren't as stung by oil prices as manufacturing companies, Allyn adds that "the manufacturing economy still employs a lot of people. Raw material prices are going, and it negatively impacts corporate profits."

The CNET tech index inched down 4.39 to close at 3,100.75. Losers edged out winners, with 57 of the 97 stocks in the index falling and 40 rising.

Of the 18 sectors tracked by CNET Investor, computer memory storage posted the sharpest gains, rising about 6 percent. Wireless companies were the day's largest losers, sliding nearly 6 percent.

Among members of the CNET tech index, eBay rose $10.88, or nearly 17 percent, to $76.56.

The Internet auction Web site said it expects worldwide expansion to drive sales to $3 billion in sales in 2005, and revenue will increase 50 percent annually during the next five years.

Earnings warnings caused some heavy trading. Informix shares dived after the database-software maker warned it would take a third-quarter loss, and its chairman resigned. The shares fell 53 cents, or 10 percent, to $4.63 on a volume of 24 million shares, four times more than the stock's average daily volume of about 5.6 million shares.

Shares of online financial news provider TheStreet.com fell $1.13, or 18 percent, to $5 after the company announced that third-quarter revenue would be lower than expected.

Internet consulting firm U.S. Interactive today said it will not meet third-quarter revenue expectations and plans to cut its job force by 15 percent. The company's shares fell $1.34, or about 34 percent, to $2.66.

The Philadelphia semiconductor index inched up 2.36 to 1,030.83, led by chipmaker Altera, which rose $3.44 to close at $55.88.