MARKET CLOSE: Greenspan speaks; stocks slide

3 min read

Blue-chip and technology stocks lost ground again Tuesday even though Federal Reserve Board Chairman Alan Greenspan told a Senate Banking Committee the U.S. economy wasn't in a recession. Or at least not yet.

The Nasdaq composite fell 62 points to close at 2,427.73, while the Dow Jones industrial average lost 43 to finish at 10,903.32.

Greenspan did say the U.S. economy faces a sharp slowdown in the coming year as businesses work off unsold inventories and consumers appear less confident about the future.

When asked point-blank in a Senate Banking Committee hearing if the U.S. economy was already in a recession, he replied: "At the moment we are not."

His hopeful tone initially boosted stock prices but they later turned south as some investors were disappointed that he did not signal an urgent need to cut rates.

"Some people were disappointed that Greenspan did cite some signs of strength in the economy," said Ned Riley, chief investment strategist at State Street Global Advisors. "They saw it as an indication that maybe we aren't on a path to recession and that monetary policy might be applied more gradually than some had factored into the price of stocks."

A stronger sign that the economy could be improving came from the Commerce Department's report that retail sales rose 0.7 percent during January, slightly ahead of analysts' expectations and the biggest jump in four months.

PurchasePro (Nasdaq: PPRO) spent most of Tuesday in the black after analysts praised the business-to-business services provider for its fourth-quarter results and strong outlook. However, the stock closed off 6 cents to $15.88.

Yahoo (YHOO) lost $1.38 to $27.13. America Online Time Warner (AOL) moved up 56 cents to $48.09 while Amazon.com (AMZN) and CMGI (CMGI) shed 75 cents and 50 cents a share, respectively. eBay (EBAY) rose 25 cents to finish at $47.44.

Internet retailer Buy.com (Nasdaq: BUYX) picked up 6 cents to 63 cents a share after the company said its chief executive and chief financial officers have resigned from the company.

Internet-based job recruiting company HotJobs.com (Nasdaq: HOTJ), up 25 cents to $8.50, reported a wider fourth-quarter loss and gave a cautious revenue outlook for the first quarter and 2001 amid a sluggish economic environment.

CS First Boston analyst Charles Glavin handed out downgrades to three big-name technology stocks on Tuesday, citing concerns over withering demand and decreased earnings visibility. Intel (Nasdaq: INTC) clipped $21.30 to $32.44, Broadcom (Nasdaq: BRCM) fell $5.44 to $75 and Texas Instruments (NYSE: TXN) closed off 29 cents to $37.41.

Advanced Micro Devices (AMD) inched up 1 cent to $24.01 and IBM (IBM) slid $1.15 to $113.75.

Fiber-optic network company Williams Communications Group (NYSE: WCG) dropped 70 cents to $16.40 after it said that it expects first-quarter recurring network sales to grow between 112 percent to 115 percent from the year-ago period.

Sycamore Networks (SCMR), which reports earnings after the bell, slid 50 cents to $22.56.

Cisco Systems (CSCO) clipped $1.06 to $28.50. Nortel Networks (NT) lost 82 cents to $29.75 and Lucent Technologies (LU) finished off $1.26 to $13.54.

Among widely held PC stocks, Dell (DELL) fell $1 to $22.25; Compaq (CPQ) gained 67 cents to $22.67; Apple Computer (AAPL) shaved off 56 cents to $19.13 and Gateway (GTW) tacked on 5 cents to finish at $19.65.

Microsoft (MSFT) closed off 56 cents to $58.19 while Oracle (ORCL) and Sun Microsystems (SUNW) clipped 44 cents and 38 cents a share, respectively.