Inflation woes stymied stocks at midday on Tuesday. The Nasdaq dropped 38 to 2,432 and the @Net lost 9 to 288. The Dow Jones industrial average lost 113 to 10,446.
Stocks across the board were sent lower as investors anticipate an interest rate hike in the near future. U.S. manufacturing grew and the cost of raw materials rose for May, according to a National Purchasing Managers survey of executives. A rise in the cost of materials tends to get added into the price of products, leading to inflation. The Federal Reserve, which left rates untouched unchanged at 4.75 percent at its last meeting on May 18, said it would raise rates if the economy continued to accelerate.
Amazon.com Inc. (Nasdaq: AMZN) slipped 6 3/4 to 112 after a Barron's story reiterated the challenges that lie ahead for the online retailer. Barnesandnoble.com Inc. (Nasdaq: BNBN) fell 3 1/16 to 20 1/8 on expectations that the Federal Trade Commission will oppose its parent's merger with Ingram Books, a book distributor. America Online Inc. (NYSE: AOL) dropped 4 to 115 1/4 and Yahoo! Inc. (Nasdaq: YHOO) lost 6 15/16 to 141 1/16.
Baan Co. NV (Nasdaq: BAANF) rose 15/16 to 12 3/8 after landing an order from VNU World Directories for its Front Office software for 300 users.
Complete Business Solutions Inc. (Nasdaq: CBSI) fell 7 1/4 to 17 after the IT services provider SG Cowen cut its rating to "buy" from "strong buy," citing weaker demand and project delays of its customers.
Dialogic Corp. (Nasdaq: DLGC) rose 9 15/16 to 43 5/16 after Intel Corp. (Nasdaq: INTC) agreed to buy the networking products maker for $780 million in a cash tender offer. Intel slipped 1 9/16 to 52 1/2 and Advanced Micro Devices Inc. (NYSE: AMD) dropped 1/8 to 18 3/8.
E*Trade Group Inc. (Nasdaq: EGRP) slipped 3 15/16 to 40 9/16 after agreeing to buy Telebanc Financial Corp. (Nasdaq: TBFC) for $1.8 billion. Telebanc shares gained 9 7/16 to 75 15/16. Net.B@nk Inc. (Nasdaq: NTBK), another online banking services company, rose 1 3/4 to 44 3/8.
SilkNet Software Inc. (Nasdaq: SILK) gained 3 to 40 1/2 after its underwriters began coverage of the e-commerce software company. BancBoston Robertson Stephens and Credit Suisse First Boston both initiated with "buy" ratings.
Sun Microsystems Inc. (Nasdaq: SUNW) slipped 2 3/4 to 57 after Bank of America Securities lowered its rating to "hold" from "buy."
Dell Computer Corp. (Nasdaq: DELL) lost 9/16 to 33 7/16. International Business Machines Corp. (NYSE: IBM) dropped 3 7/8 to 112 1/8, Gateway Inc. (NYSE: GTW) declined 15/16 to 59 7/8 and Apple Computer Inc. (Nasdaq: AAPL) gained 7/16 to 44 1/2.
Among software makers, Microsoft Corp. (Nasdaq: MSFT) slid 1 7/16 to 79 1/4 after its antitrust trial resumed. Computer Associates International Inc. (NYSE: CA) added 5/8 to 47 15/16 and Oracle Corp. (Nasdaq: ORCL) rose 3/16 to 25.