Dow gains on economic report as techs lag

A report that strengthens the view that the U.S. economy is headed for a soft landing fails to lift technology stocks.

3 min read
A report that strengthened the view that the U.S. economy is headed for a soft landing failed to lift technology stocks.

After rising as high as 3,753.95, the Nasdaq composite index closed down 27.06 at 3,658.46, and the Standard & Poor's 500 index rose 0.60 to 1,438.70.

The Dow Jones industrial average rose 80.58 to 10,687.53 led by Hewlett-Packard, which gained $4.63 to $112.50.

At the end of regular trading, Intel was down $1.31 at $63.31, and Microsoft edged up 69 cents to $69.38.

The Commerce Department reported that single-family home sales fell 3.7 percent in June as the number of homes sold reached a level not seen since December 1997. The 829,000 homes sold during the month was nearly 13 percent lower from the 948,000 homes sold in June of last year.

"The increase in the number of homes for sale in June indicates that builders may have to curb single-family housing starts in the months ahead," wrote Merrill Lynch economist Karen Dexter in a report.

Investors interpreted the report as further evidence that the economy is cooling, which could convince the Federal Reserve to leave interest rates untouched when it meets later this month.

"The ping-pong ball keeps going back and forth in terms of what the Fed is going to do," said Tony Cecin, head of trading at U.S. Bancorp Piper Jaffray.

The CNET tech index rose 20.77 to close at 2,717.77. Losers and winners finished about even, with 51 of the 97 stocks in the index falling, 43 rising and three remaining unchanged.

Of the 18 sectors tracked, computer memory storage and wireless companies posted the sharpest drops, falling 3 percent each. Networking product makers were the day's largest gainers, climbing nearly 6 percent.

The initial offering of Opnet Technologies, a network management software developer, was the biggest percentage gainer on the Nasdaq. The shares jumped $5.75, or 44 percent, to $18.75.

Among members of the CNET tech index, Ingram Micro fell $2.69, or 14 percent, to $16.06 after releasing unflattering earnings news.

Shares of Dell Computer took a hit after U.S. Bancorp Piper Jaffray cut the stock from "strong buy" to "buy" on growth concerns. Dell fell $2.08 to $39.48 on a volume of 47.4 million shares, making it the most actively traded stock on the Nasdaq today.

"While we expect Dell to continue to deliver on the bottom line," wrote analyst Ashok Kumar in a report, "we are skeptical that the company will be able to meet the 30 percent revenue-growth expectations on a sustainable basis."

Kumar noted sluggishness in notebook and server sales, as well as slow overseas sales as areas of concern.

On the bright side, Siebel Systems gained $10.50 to $150.13, while Avici Systems, a maker of high-capacity data routers, surged $24.81, or 23 percent, to $132.31. The company went public last Friday.

Software maker Intuit rose $4.19, or nearly 12 percent, to $39.19 after Deutsche Banc Alex Brown started coverage of the company with a "strong buy" rating.

Shares of Sapient and Global Crossing rose after reporting earnings news. Sapient rose $16.94, or 16 percent, to $120.81, while Global Crossing climbed $2.56, or 10 percent, to $27.88.

Vignette, a developer of e-commerce software, rose $6.06, or about 21 percent, to $35.13 after making a marketing deal with consulting firm Arthur Andersen. CNET Networks, publisher of News.com, owns a stake in Vignette.

The Philadelphia semiconductor index fell 1.58 to 954.25, led by chipmaker Advanced Micro Devices, which lost $5.75 to close at $62.