Markets drift in calm trading

Tech stocks manage to stay afloat as the Dow falls for a second day, led lower by retailer Home Depot.

3 min read
Tech stocks managed to stay afloat as the Dow fell for a second day.

The Nasdaq composite index rose 9.54 to 3,861.20, and the Standard & Poor's 500 index dropped 4.58 to 1,479.85.

The Dow Jones industrial average fell 58.61 to close at 11,008.39, led by Home Depot, which dropped $2.25 to $51.25.

At the end of regular trading, Intel closed up 19 cents at $68.06. Microsoft fell 63 cents to $71.

"I look at the news and think I must be crazy," said Phil Dow, a market strategist at Dain Rauscher Wessels. "To me, most of the important (recent) news was good, but the market is responding as if the glass is half empty," he said referring to a string of strong earnings reports.

"Individual investors got stung in the spring and they're a little more cautious," Dow said. "Institutional tech fund managers have been masters of the universe, and now they've probably had their first down quarter, so they are under much closer scrutiny not only by their bosses, but investors, too."

Among the economic reports issued today, the Consumer Price Index rose 0.2 percent in July compared with June's 0.6 percent increase. The index gained 0.2 percent excluding the volatile food and energy price.

The report showing modest inflation indicates that economic growth is gradually slowing, making the Federal Reserve more likely to leave interest rates untouched when it meets Aug. 22.

"This was the last hurdle to be cleared," said John Ryding, chief economist at Bear Stearns. "The Fed was unlikely to do anything even before CPI numbers came out...and these numbers put the markets further at ease."

The CNET tech index edged up 4.16 to close at 3,165.82. Winners beat out losers, with 53 of the 97 stocks in the index rising, 40 falling and four remaining unchanged.

Of the 18 sectors tracked by CNET Investor, makers of semiconductors and semiconductor equipment posted the sharpest gains, climbing about 2 percent each. Communications service providers were the day's largest losers, falling 1 percent.

Among members of the CNET tech index, Analog Devices and Maxim Integrated Products posted gains.

Analog Devices jumped $11.38, or nearly 14 percent, to $94.25. The high-speed communications chipmaker said fiscal third-quarter profit tripled because of strong demand for communications gear.

Chipmaker Maxim rose $2.50 to $78.50 and hit a 52-week high of $79.25, compared with a low of $30.31.

Telecom network-equipment maker Datum gained $1.94 to $30.81 and set a high of $31.31, compared with its 52-week low of $6.

BEA Systems rose $8.13, or about 16 percent, to $57 after the developer of e-commerce software reported a fiscal second-quarter profit yesterday on an 80 percent sales increase.

Earnings news was not so fortunate for TelCom Semiconductor, which fell $3.50, or 20 percent, to $13.75. The maker of chips used in wireless telephones said slowing orders will cause fiscal third-quarter revenue to miss expectations.

Mercator Software dropped $12.88, or 44 percent, to $16.06. Volume nearly reached 12 million shares, more than 16 times the stock's average daily volume of about 725,000.

The Philadelphia semiconductor index rose 12.85 to 1,073.37, led by LSI Logic, which gained $2.25 to close at $40.

Shares of PeoplePC, a seller of low-cost computers that already slashed the cost and size of its IPO, fell $1.13 to $8.88, or 11 percent below the offering price of $10, in their first day of trading.