Tech stocks slide; Dow holds ground
Fresh from the Labor Day holiday, investors sell tech shares while old-economy stocks escape with slight gains.
The Nasdaq composite index fell 91.15, or 2 percent, to 4,143.18, and the Standard & Poor's 500 index dropped 13.69 to 1,507.08.
The Dow Jones industrial average rose 21.83 to close at 11,260.61, led by International Paper, which gained $1.13 to $32.94.
The markets "have had mixed signals from software, mixed signals from semiconductors over the past few weeks," said Brian Belski, a market strategist at U.S. Bancorp Piper Jaffray, who says jumbled news from the sectors has put investors a little more on edge.
"It was almost as if people were trying to will the markets higher the last couple of weeks without much justification," said Belski, who did not put much weight in August's tech rally. The Dow and S&P closed only slightly higher last week, while the Nasdaq rose nearly 5 percent.
"Everybody decided that fourth-quarter earnings would be great, so people decided to buy stock," he said, referring to reports about the promise of fourth-quarter optimism. Belski questions the substance of the rally, since few investors were part of it. The August stock markets were characterized by a particularly low volume of shares trading hands.
Mixed news from tech giants such as Hewlett-Packard and Intel has chipped away at stock prices in recent weeks.
Intel stock dropped today after an analyst downgrade. At the end of regular trading, the chip giant slipped $4.69 to $69.25. HP dipped $2.06 to $122.94.
Other large tech stocks slipped. Dell Computer fell $2.06 to $41, and Cisco Systems closed at $66, down $2.56. Microsoft slipped 6 cents to $70.13.
The Philadelphia semiconductor index fell 20.82 to 1,121.75, led by chipmaker Advanced Micro Devices, which lost $2.63 to close at $34.88.
The CNET tech index lost 82.48 to close at 3,305.28. Losers outpaced winners, with 72 of the 97 stocks in the index falling and 25 rising.
Almost all of the 18 sectors tracked by CNET Investor posted declines. Wireless companies logged the most losses, falling 4 percent, while Internet e-tailers were the day's only gainers, climbing a nearly 6 percent.
Amazon.com rose $4.19, or 10 percent, to $45.69, while Priceline.com gained $3, or almost 12 percent, to $28.94. eBay closed at $67.50, up $4.63.
Among members of the CNET tech index, WorldCom shares fell $3.19 to $33.75.
The company acquired a controlling interest in Intermedia Communications and a stake in Intermedia's Digex for $6 billion in a move to become the leader in business Web hosting.
Digex fell $16.63, or almost 20 percent, to $67.88, and Intermedia rose $8.59, or nearly 38 percent, to $31.47.
Shares of Ciena also took a hit, falling $13.81 to $216.31. The company said it may fail to collect up to $28.2 million from a European customer, forcing the fiber-optic equipment maker to take a fiscal fourth-quarter charge against earnings of as much as 13 cents a share, sending its shares lower.
iXL Enterprises is the latest consulting company to slide on lowered earnings expectations warnings, joining the industry-wide shakeout.
iXL fell $1.38, or 16 percent, to $7. The company expects to post a third-quarter loss saying revenue for the quarter, which ends Sept. 30, will be approximately 15 percent to 20 percent below the $119.2 million reported in the preceding quarter.
Dour analyst comments hit U.S. Interactive. Shares of the Internet consulting firm closed at $6.94, down 69 cents. The stock traded as low as $6.69, a new 52-week low compared to a high of $92.