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Techs lollygag after inflation report

The technology sector hardly moves as investors push blue chip stocks higher following a report indicating that inflationary pressures eased last month.

The technology sector hardly moved Friday as investors pushed blue-chip stocks higher following a report indicating that inflationary pressures eased last month.

The tech-heavy Nasdaq composite index fell 6.85 points to 1,956.47, and the blue-chip Dow Jones industrial average rose 117.69 to 10,416.25.

Friday's lackluster tech performance follows a slight rally at the end of Thursday's session, as buyers bid the Dow into positive territory and the Nasdaq up from its session lows, but failed to drive it above 2,000.

A much-anticipated producer price index (PPI) gave investors a surprise; the Labor Department's report showed prices paid to U.S. producers fell in July at the fastest pace in eight years. The index, considered the main reader on inflation, tumbled 0.9 percent last month, mostly due to dropping energy prices. The core PPI, which excludes the volatile food and energy sectors, rose 0.2 percent in July after posting a 0.1 percent increase in the prior month.

Economists expected the PPI to fall 0.3 percent last month and the core rate to rise 0.1 percent.

"The PPI data provided a mixed picture for equities. They were down more than expected, mainly in the energy sector," Jack Regan, chief market strategist with Josephthal, told Reuters. But the core rate was higher than expected.

The news was mostly positive for investors, since it gives the Federal Reserve the go-ahead to cut interest rates again at the next meeting, scheduled for Aug. 21.

In other news, software stocks took a hit after three brokerage firms raised red flags for tech giants including Oracle, down 83 cents to $15.16; Siebel Systems, down $1.48 to $28.29; and BEA Systems, off $1.72 at $18.50.

Baby Bell local phone companies were also in the spotlight as the idea of a Bell breakup has become a rallying point for rivals and critics of the giants. They allege that Verizon Communications, SBC Communications, BellSouth and Qwest Communications International have abused their control of the networks. Bell South shares rose 51 cents to $40.11.

Pixar Animation Studios rose $2.24 to $42.54 following its better-than-expected second-quarter report. The company's profit was 17 cents a share, topping the 13 cents predicted by First Call.

Among other heavily traded techs, Microsoft rose 51 cents to $65.52, Cisco Systems inched up 4 cents to $18.33 and Sun Microsystems slipped 55 cents to $16.21.

Amazon.com fell 51 cents to $9.95, AOL Time Warner fell 56 cents to $44.30 and Yahoo dropped 86 cents to $15.42.

Staff and Reuters contributed to this report.