Nasdaq, Dow stumble on light trading day
Taking a breather from last week's record run on the Nasdaq, stocks edge lower on light volume as investors lay low pending new economic data.
Data from the Labor Department that pointed toward a slowdown in worker productivity per hour failed to encourage investors to continue last week's rally, which sent the Nasdaq up 19 percent.
The government reported today that first-quarter productivity rose 2.4 percent--the slowest rate since last year's second quarter and a significant decline from the 6.9 percent set in the previous quarter.
Investors are "probably waiting on economic data coming out Friday," said Richard Peterson, a market strategist at Thompson Financial, referring to the Producer Price Index number that will be released later this week.
"Given last week, it's not unreasonable for a pause," Peterson said. "It's probably healthy that the rally did not accelerate."
Evidence that the economy is slowing could make it less likely that the Federal Reserve will raise interest rates later this month.
But last week's good news might mean bad news. "We're in a dilemma here," said Doug Kliggott, chief U.S. equity strategist at Morgan Stanley. "A market rally on economic data kind of defeats its own purpose.
"If we're rallying because we think the Fed is done (raising interest rates), sharply higher stock prices probably (means) the Fed isn't done," Kliggott said, adding that he "is sticking with a cautious stance" on the market.
The Nasdaq fell 65.39 to 3,756.37, and the Standard & Poor's 500 index dropped 9.79 to 1,457.84. The Dow Jones industrial average fell 79.73 to close at 10,735.57, led by 3M and American Express.
At the end of regular trading, Intel closed down $3 at $129.56, and Microsoft rose $2.75 to $69.63.
The CNET tech index lost 37.93 to close at 2,775.37. Losers edged out winners, with 71 of the 98 stocks in the index falling, 26 rising and one remaining unchanged.
Of the 18 sectors tracked, Internet e-tailers and server hardware companies posted the sharpest drops, falling about 5 percent each. PC software makers were the day's largest gainers, climbing a slim 1 percent.
Shares of Electronics for Imaging fell $10.81, or 31 percent, to $23.94 on a volume of 22.8 million shares, or more than 33 times the stock's average daily volume.
The maker of equipment-linking printers and copiers to computer networks warned that second-quarter profit will fall below analysts' estimates.
Adobe posted big losses, falling $13 to $115.69. Veritas Software fell $8 to $124.88, and PMC-Sierra stumbled $7.13 to $180.
Shares of chipmaker Ciena were not bothered by the sour market, rising $4.25 to $137.88. Siebel Systems gained $5.19 to close at $136.94.
The Philadelphia semiconductor index fell 40.78 to 1,112.18, led by chip equipment maker KLA-Tencor, which lost $4.13 to close at $54.56.
A top U.S. regulator said today that WorldCom might need to sell its UUNet Internet unit for government approval of its pending merger with Sprint. WorldCom shares rose $1 to $41.94, and Sprint rose 75 cents to $64.69.