The Wall Street Journal-20080117-Intel Sends Tech Stocks Downward
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Intel Sends Tech Stocks Downward
Intel precipitated a drop in technology stocks that overshadowed strength in financial stocks such as J.P. Morgan Chase, builders such as Pulte Homes, and retailers such as Liz Claiborne.
Economically sensitive sectors such as home builders and retailers bounced after the Fed's beige-book report on the economy emerged. Among builders, Pulte Homes rose 63 cents, or 7.2%, to $9.43.
Liz Claiborne gained 83 cents, or 5.1%, to 17.23 after the clothier, known for catering to working women, hired celebrity designer Isaac Mizrahi as a creative director. Among other retailers, Home Depot added 97 cents, or 3.8%, to 26.34.
The tech-stock-heavy Nasdaq Composite took the brunt of the selling, falling 23, or 0.95%, to 2394.59, its lowest close since March 19.
Intel (Nasdaq) was the leading decliner on the Dow, plunging 2.81, or 12%, to 19.88, marking its biggest percentage drop since October 2002. The chip maker -- often seen as a weathervane for global technology demand -- sounded caution about business conditions in the first quarter and the rest of the year.
Intel's report weighed on other large-cap technology stocks, because it dashed some of the hopes raised by International Business Machines earlier this week; some market participants had hoped that global technology companies could counterbalance a slowdown in U.S. business through growth overseas.
Among other tech stocks on the Dow, Microsoft (Nasdaq) fell 77 cents, or 2.3%, to 33.23; Hewlett-Packard declined 71 cents, or 1.6%, to 44.34.
American depositary shares of ASML Holding (Nasdaq) fell 1.96, or 7.1%, to 25.60. Analysts detected less conviction in its growth outlook from the Dutch maker of equipment for the chip sector.
The leading gainer on the Dow, J.P. Morgan, rose 2.26, or 5.8%, to 41.43. The bank earned nearly $3 billion in the fourth quarter, in marked contrast to hometown rivals such as Citigroup and Morgan Stanley.
Wells Fargo gained 88 cents, or 3.3%, to 27.37. The sixth-largest U.S. bank by assets posted a fourth-quarter profit, even as it warned of likely higher losses on bad loans in 2008.
Ambac Financial Group plunged 8.17, or 39%, to 12.97 after the bond insurer warned it needs to raise at least $1 billion in capital and cut its dividend amid a $5.4 billion pretax write-down in the fourth quarter.
Market watchers urged caution until a fuller picture of the fourth- quarter emerges from earnings reports in the next couple of weeks.
"I'm looking over my shoulder with respect to the rest of the banks who are going to report," said Phil Dow, director of equity strategy at RBC Dain Rauscher.
Merrill Lynch and Washington Mutual, both on deck for earnings reports Thursday, "could be attention grabbers on the negative side," Mr. Dow said, adding that buyers of financial stocks were "looking for the best horse in the glue factory."
Merrill rose 2.08, or 3.9%, to 55.09; Washington Mutual shed 20 cents, or 1.5%, to 13.39.
Nymex Holdings fell 8.41, or 7.5%, to 103.98, its lowest close since going public. Analysts expressed disappointment with December trading volumes -- despite a historic run at $100-per barrel oil -- for the owner of futures-trading venue New York Mercantile Exchange.
