Tech stocks dip as Dow jumps
Investors retreat to Old Economy stocks as concern about technology companies' valuations and presidential election uncertainties persists.
The Nasdaq composite index closed down 29.31 to 2,615.98, nearly erasing Friday's 47-point gain.
Indexes that are less reliant on tech shares fared better Monday. "People were putting money into safe bets," said Tony Cecin, head of trading at U.S. Bancorp Piper Jaffray. "There's no compelling reason to jump in and buy tech stocks," he said.
The Standard & Poor's 500 index climbed 9.84 to 1,325.07, and the Dow Jones industrial average rose 187.41 to 10,560.95.
Among the issues troubling tech investors Monday, the U.S. Supreme Court set aside a Florida court ruling allowing manual recounts in the presidential election. The Supreme Court also sent the case back to the Florida courts "for further proceedings."
"It's basically a nonruling," said Todd Clark, head of listed trading at WR Hambrecht. The markets "were hoping for some kind of resolution to this thing (on Monday), but it doesn't look like that's going to happen."
Skeptics say valuations are not likely to return to the lofty levels of 1999 and early 2000. But optimists say the weakness in tech stocks may be setting the stage for a modest rally.
"A (Nasdaq) low will be established within the next 40 trading days as earnings pre-announcements draw expectations to distinctly conservative levels, the presidential mess ends, and the Fed capitulates that interest rates are too high," Tom Galvin, chief investment officer at Credit Suisse First Boston, wrote in a report.
Galvin said that in about six months, inventory levels will decrease in the technology and retail sectors, sending stocks upward again.
The CNET tech index inched up 4.57 to 2,219.75. Losers and winners were balanced, with 46 of the 97 stocks in the index falling, 47 rising and four remaining unchanged.
Of the 18 sectors tracked by CNET Investor, network equipment companies posted the sharpest drops, falling about 2 percent. PC hardware makers were the day's largest gainers, climbing 2 percent.
Online brokers fell after Scott Appleby, an analyst at Robertson Stephens, cut fiscal 2001 earnings estimates for Ameritrade Holding to 28 cents a share from 70 cents, and fiscal 2000 earnings on Knight Trading to $2.03 a share from $2.10.
Ameritrade closed down 31 cents to $8.50, and Knight lost $1.19 to $16.38.
Xerox shares fell $1.25, or 20 percent, to $5 and set a new 52-week low at $4.75. That compares with the stock's high of $30.50 over the same duration.
Moody's Investors Service on Friday lowered its credit rating on $11 billion worth of Xerox bonds to below investment grade.
Qualcomm made some solid gains, rising $7, or 8 percent, to $90. The chip company reached an agreement with China's Ministry of Information Industry, which will endorse a Jan. 28 arrangement between China Unicom and Qualcomm. The deal entails the adaptation of Qualcomm's CDMA technology by China Unicom.
RF Micro Devices rose $5.75, or 27 percent, to $26.94. The chip company will be added to the Standard & Poor's MidCap 400 index effective after the close of Monday trading.
Chip stocks moved somewhat higher. The Philadelphia semiconductor index rose 13.13, or 2 percent, to 551.48, boosted by National Semiconductor, which rose $1.75, or about 10 percent, to $19.75.