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Tech stocks fall as Dow climbs

Tech stocks dip at midday and Old Economy stocks climb as investors await a decision from the U.S. Supreme Court that could decide the next U.S. president.

3 min read
Tech stocks dipped at midday and Old Economy stocks climbed as investors awaited a decision from the U.S. Supreme Court that could decide the next U.S. president.

The Nasdaq composite index slipped 43.79 to 2,971.31, and the Standard & Poor's 500 index fell 4.08 to 1,376.12. The Dow Jones industrial average rose 86.65 to 10,812.45.

"Both the Dow and the Nasdaq are playing the waiting game," said Arthur Hogan, chief market analyst at Jefferies.

The day after hearing arguments from both sides, the Supreme Court got down to business in deciding whether to let the vote recount continue in Florida in a contest between presidential candidates George W. Bush and Al Gore. Most observers conclude that a ruling against a recount would be a victory for Bush and leave Gore with very few options.

The presidential battle has "been an amazing roller-coaster ride of emotions and decisions," Hogan said, adding that the markets would just prefer a president at this point, regardless of which candidate get the nod.

"Overall, the market prefers decision, and we haven't got that yet," he said.

The CNET tech index inched down 18.04 to 2,426.76. Decliners led advancers, with 59 of the 97 stocks in the index falling, 36 rising and two remaining unchanged.

Of the 18 sectors tracked by CNET Investor, chip equipment makers posted the sharpest drops, falling 4 percent. PC hardware companies were the day's largest gainers, climbing nearly 1 percent.

Surprisingly, negative earnings news has failed to sink some tech stocks. Advanced Micro Devices, Intel and DoubleClick recently issued negative financial forecasts, but their stocks advanced.

AMD warned Monday that fourth-quarter revenue and profit will be lower than expected. The chipmaker's shares on Tuesday rose 19 cents to $17.50.

Intel warned late Thursday that fourth-quarter revenue will be flat or possibly below the $8.7 billion the company reported in the third quarter. The chipmaker slipped 56 cents Tuesday to $36.88, but they are still up 14 percent since the announcement.

DoubleClick said late Monday that earnings will fall short of expectations. Shares in the Internet advertising giant climbed $1.81, or 15 percent, to $13.75.

Hogan sees this divergence between the price and the news surrounding the stock as an optimistic sign. The difference "reflects a bottoming out in the marketplace, a lot of the bad news has already been priced in."

Among other tech shares, PSINet rose 63 cents, or 57 percent, to $1.72. The Washington Post reported that the Internet service provider laid off 300 workers Monday and that one of its largest shareholders, Janus Capital, has shed most of its shares in the company.

Yahoo shares showed some new life. The stock has fallen about 83 percent this year, setting a new 52-week low of $32.94 early Tuesday. But the shares rebounded in midday trading, climbing $3.19, or 9 percent, to $37.06.

The news was not so great for TriQuint Semiconductor, as its shares fell $11.44, or about 19 percent, to $50. The maker of mobile phone and optical networking chips was downgraded to "hold" from "buy" by Credit Suisse First Boston analyst Michael Masdea.

Dallas Semiconductor dropped $6.88, or 20 percent, to $27.13. The chipmaker said it expects fourth-quarter earnings to be 34 cents to 37 cents a share. Wall Street expected the company to make 44 cents, the consensus estimate of five analysts polled by First Call/Thomson Financial.

The broader chip sector also took a hit. The Philadelphia semiconductor index fell 33.40, or about 5 percent, to 649.37, led by chip equipment maker KLA-Tencor, which lost $3.50 to $33.31.