Blue Chips Down, Nasdaq Up
NEW YORK – Blue-chip stocks slid Tuesday in mixed trading as initial strength in technology stocks was offset by shaky financial prices.
The Dow Jones industrial average shed 52.12 points, or 0.48 percent, to 10,883.05. The technology-heavy Nasdaq composite index gained 24.37 points, or 1.12 percent, to 2,197.94, according to the latest data.
The broad market measure, the Standard & Poor's 500 Index, slipped 2.44 points, or 0.19 percent, to 1,261.07. The S&P had been on an uptick for four straight weeks.
``You've got a battle between the analysts' upgrades of some technology stocks which is helping Nasdaq ... and what was some shockingly bad economic news with productivity down for the first time in six years, and average wages up a lot,'' said Uri Landesman, chief investment officer with money management firm AFA Management Partners.
Technology stocks prices were mostly flat after an early rally buoyed by an investment house's upgrade of tech bellwether Cisco Systems Inc., which reports quarterly results after the close..
The productivity numbers are ``weighing a little bit on the blue chips. It's the first time that productivity went down in six years and with higher energy prices it could mean that we may be headed for a little higher inflation,'' said Peter Cardillo, director of research at Westfalia Investments.
``The techs are hanging in there, the story is what Cisco is going to say this afternoon,'' he said. ``There was an upgrade on Cisco and the market is looking into the fact if they can be a little upbeat on their guidance.''
Tech bellwether Cisco Systems Inc. buoyed the tech-heavy Nasdaq with a gain of $1.05 to $20.3 after Morgan Stanley raised its rating on the Web gear maker, saying it expects the market for Cisco's key products to turn the corner soon.
Investors crossed their fingers for positive guidance from the Cisco after it warned last month that results would land far below forecasts.
The Labor Department said productivity for workers outside the farm sector fell at an annual rate of 0.1 percent in the first quarter, fanning concern over the waning economy.
Unit labor costs -- a key measure of inflation pressure -- soared at a 5.2 percent annual pace, notching the largest gain since the last three months of 1997.
Many analysts believe the Fed will cut rates for a fifth time this year when it meets on May 15, although some said higher labor costs could force the central bank to think twice before lowering rates again.
American Express Co. weighed on the blue-chip Dow with a $2.30 drop to $40.93 after Morgan Stanley lowered its rating on the credit-card giant, citing little upside potential for the stock in the weak economy. Other interest-rate sensitive financials also fell, including Dow stocks JP Morgan Chase & Co. and Citigroup Inc.
Dow component General Electric Co. shed 71 cents to $49.25 and proposed merger partner Honeywell International, also a Dow stock, lost 94 cents to $48.96. European Union Competition Commissioner Mario Monti said a formal notice laying out objections to GE's proposed purchase of Honeywell was imminent. The two firms won U.S. clearance last week and are now trying to win approval from the European Commission.
Dell Computer Corp. lost $1.11 at $24.8 after a brief upturn. The world's largest PC maker said it would meet sales and earnings targets for the quarter just ended and would slash up to 10 percent of its work force in the tepid economy.
The early enthusiasm that had carried the stock higher fizzled out as investors were said to be still jittery about the personal computer market. The shares of rivals Apple Computer Inc., Gateway Inc., Compaq Computer Corp. and Hewlett-Packard Co. all fell.
Declining issues led advancers 15 to 14 on the New York Stock Exchange. Volume was 650.04 million, compared with 606.49 million at the same point Monday.
The Russell 2000 index slipped 1.08 to 488.56.
Overseas, Japan's Nikkei Stock Average fell 1.7 percent. Germany's DAX index was up 0.2 percent, Britain's FT-SE 100 was up 0.3 percent, and France's CAC-40 was up 0.3 percent.
Stocks edged lower on Monday as investors grappled with relentless worries over the nation's soft economy and cashed in on gains after Wall Street's four-week winning streak.