The Dow Jones industrial average took its lumps ahead of Tuesday's Fed meeting, falling 113 points to 11,144.27. However, the tech stocks continued their frenzied rally as the Nasdaq composite marched up 31 points to close at 3,783.89, another record.
"I think we're just on one hand unwinding some of the strength in Friday's market. The other issue is we're going into an FOMC meeting tomorrow," said Philip Orlando, chief investment officer of Value Line's asset management division. "I wouldn't get real worked up over it. I think once we get through tomorrow's Fed meeting and what I think is going to happen, which is nothing, we can officially start our Santa Claus rally."
Dell Computer Corp. (Nasdaq: DELL) closed up 2 1/8 to 47 11/16 after JP Morgan upped the stock to a "buy" from a "market performer" rating.
"We believe Dell could have an edge among early adopters (of Windows 2000) in corporate America, in the high-end consumer market and in small and medium business," the securities house said in a report.
Compaq Computer Corp. (CPQ) closed off 3/8 to 25 3/8 while Gateway Inc. (GTW) and Apple Computer Inc. (AAPL) shed 5/8 and 2 a share, respectively.
Cisco Systems Inc. (Nasdaq: CSCO) closed up 3 9/16 to 103 1/4 after it agreed to buy the optical networking systems business of Italy's Pirelli SpA for $2.15 billion in stock. The deal gives Cisco an entry into the dense wave division multiplexing (DWDM) market.
3Com Corp. (COMS) inched up 1/8 to 48 7/8 and Lucent Technologies Inc. (LU) added 2 13/16 to 83 5/16.
In the communications chip space, Conexant (Nasdaq: CNXT) lopped off 3 5/16 to 66 5/16 after announcing plans to buy Maker Communications (Nasdaq: MAKR), which jumped 7 1/2 to 41 3/4.
Microsoft Corp. (MSFT) lost 2 1/2 to 112 3/4. Oracle Corp. (ORCL) rallied up 5 5/8 to 96 5/16 and Sun Microsystems Inc. (SUNW) closed off 11/16 to 74 7/16.
Chip equipment makers were also active as Novellus Systems (Nasdaq: NVLS) surged up 28 25/64 to 113 9/16 after saying its fourth quarter earnings would "substantially exceed" estimates.
Applied Materials Inc. (AMAT) rose 5 9/16 to 116 5/16 and KLA-Tencor Corp. (KLAC) moved up 4 1/8 to 100 11/16.
Red Hat (Nasdaq: RHAT) closed up 15 1/16 to 267 15/16 despite missing estimates for its latest quarter. News of a stock split minimized any damage.
Yahoo! Inc. (YHOO) rose 19 ? to 369 ?. America Online Inc. (AOL) picked up 11/16 to 85 11/16 while Lycos Inc. (LCOS) and Amazon.com Inc. (AMZN) finished up 1 5/8 and 2 15/16 a share, respectively.
Intel Corp. (INTC) closed off 1 to 81 1/16. Advanced Micro Devices Inc. (AMD) added 1/2 to 29 5/16 and International Business Machines Corp. (IBM) closed off 1 15/16 to 108 1/16.