Investors regaining some of their confidence in
high-tech stocks bid the sector higher Wednesday while lessening
their reliance on safer blue chips. The result was a mixed session
on Wall Street.
The Dow Jones industrial average closed down 107.91 at
10,795.41.
The Nasdaq composite index rose 63.68 to 2,491.40. But the
Standard & Poor's 500 index, which has a smaller concentration of
tech issues than the Nasdaq, fell 2.88 to 1,315.92.
Analysts said investors were still unsettled by congressional
testimony Tuesday from Federal Reserve Chairman Alan Greenspan, who
indicated interest rate cuts will be less aggressive than the
market wanted. But one potentially positive sign in Wednesday's
dealings was the fact that blue chips slipped while tech stocks
advanced.
Wednesday's movement could indicate that investors are more
comfortable committing to riskier high-tech issues, believing that
the economy will improve sooner rather than later.
"The Nasdaq is trying to make a bottom," said Peter Canelo,
U.S. investment strategist at Morgan Stanley Dean Witter.
However, it's also possible investors won't continue for long to
favor tech over safer, so-called defensive sectors like drug and
consumer stocks. The market has been alternating between riskier
and safer stocks since late last year.
"You are seeing this continuous interplay between the defensive
and aggressive sectors," Canelo said.
Investors are weaving in and out of the Dow and Nasdaq for two
key reasons, said Gregory Nie, technical analyst at First Union
Securities. First, Wall Street isn't ready to push the Dow past the
psychologically significant 11,000 mark. Second, investors also
aren't sure when the economy will show enough improvement to
justify riskier purchases in the tech sector.
But because recent selloffs haven't been major in either sector,
Nie sees reason to hope the market will rally in a few weeks.
"The market seems to be working on a higher lower than in
January. And, if we are able to maintain that, that could be an
important factor in a spring rally," Nie said.
The tech sector, which so far has suffered the weakest earnings
in the slowing economy, was mostly higher Wednesday. The tech
advance could be seen among the Dow's tech components — IBM rose
$1.35 to $115.10 and Intel climbed $1.69 to $34.13.
Among blue chips, Johnson & Johnson fell $1.25 to $95.65, and
Procter & Gamble slipped 86 cents to $73.69. Both are Dow
components.
The retailing sector was mixed despite a government report
Tuesday that consumer spending rose more strongly than expected in
January. Home Depot ended down 59 cents at $45.72, but Federated
Department Stores advanced 59 cents to finish at $44.81.
Advancing issues matched decliners on the New York Stock
Exchange, where volume came to 1.11 billion shares, up from 1.06
billion on Tuesday.
The Russell 2000 index, which tracks the performance of smaller
company stocks, inched up 0.92 to 503.49.
Overseas, Japan's Nikkei index inched up 0.1 percent, while
European markets finished lower. Britain's FT-SE 100 index slipped
0.9 percent, Germany's lost 1.2 percent and France's CAC-40 index
fell 1.7 percent.
