MIDDAY MARKETS: Inflation outlook depresses techs

3 min read

Fears that the latest economic reports signal inflation in on the rise sent techs tumbling at midday Friday. The Nasdaq fell 91.33 to 3,948.23 and the Dow Jones industrial average slipped 151.09 to 10,876.93.

The Inter@ctive Week @Net Index lost 16 to 532.08.

The gross domestic product and employment cost index reports confirmed investor fears that the U.S. economy finished 1999 with its strongest growth rate of the year while labor costs and prices crept higher. Gross domestic product grew at a 5.8 percent annual rate in the fourth quarter, above the 5.5 percent expected. The GDP price deflator, a key inflation gauge, rose at a 2 percent annual rate, above forecasts of a 1.5 percent rise.

The employment cost index showed labor costs rose at a 1.1 percent annual rate in the final quarter, above the 0.8 percent gain in the third quarter.

724 Solutions (Nasdaq: SVNX) jumped 50 to 76, or 192 percent in its IPO. The handheld wireless banking software company priced at $26 a share after doubling its expected range from $11-$13 a share to $20-$22 per share.

The day's other IPOs had yet to debut. InterWAVE (Nasdaq: IWAV), provider of equipment for wireless GSM communications, had yet to price. Online advertising and marketing company L90 (Nasdaq: LNTY) priced 6 million shares at $15 each, above their range of $10 to $12 a share. Caminus Corp. (Nasdaq: CAMZ) priced 4.3 million shares at $16, above their expected range of $13-$15 each.

Veritas Software Corp. (Nasdaq: VRTS) gained 2 3/4 to 160 1/2 after it topped analysts' estimates and announced a 3-for-2 stock split. Analysts also raised their ratings on the stock.

American depositary receipts of Ericsson (Nasdaq: ERICY) jumped 5 7/8 to 71 7/16 after the Swedish mobile-phone maker reported a 39-percent surge in fourth-quarter income and announced a 4-for-1 stock split.

Anadigics, Inc. (Nasdaq: ANAD) rose 5 7/16 to 82 9/16 as it reported fourth quarter earnings were 22 cents a share, blasting past First Call's estimate of 16 cents a share. The company also announced a 3-for-2 stock split.

Former trade publisher Ziff-Davis Inc. (NYSE: ZD) fell 1/16 to 18 3/4 after it said its online business ZDNet (NYSE: ZDZ),down 7/8 to 29 3/16, will be converted into an independent company. ZDNet operates ZDNnet Inter@ctive Investor.

Documentum, Inc. (Nasdaq: DCTM) blasted up 23 percent, or 13 3/8 to 70 5/8, after it reversed the loss of a penny a share predicted by First Call, and analysts raised their ratings.

Amazon.com Inc. (Nasdaq: AMZN) fell 5 11/16 to 61 1/4, on news it will lay off 2 percent of its workforce. Yahoo! (Nasdaq: YHOO) lost 3 1/4 to 334 1/8 and America Online Inc. (NYSE: AOL) dropped 2 1/16 to 59 9/16.

Dell Computer Corp. (Nasdaq: DELL) rose 1/2 to 38 1/16 and Compaq Computer Corp. (NYSE: CPQ) gained 3/16 to 28 13/16.