U.S. Stock Prices Close Mixed

A key congressional address by Federal Reserve Chairman Alan Greenspan did little to sway blue-chip U.S. stocks Tuesday despite a selloff in the bond market.

But the Fed chief's comments failed to curb investor appetite for technology shares, with the computer sector ramping higher for the fourth day.

"If anybody was looking for some direction for the stock market from Greenspan's remarks, they did not get it," said Hugh Johnson, chief investment strategist at First Albany Corp.

The Dow Jones Industrial Average declined 8.26 points, or 0.1 percent, to 9,544.42. The index had risen as much as 58.65 points in the morning.

The Nasdaq Composite, packed with computer-related issues, climbed 1.5 percent.

In testimony to the Senate Banking Committee, Greenspan suggested that the Fed's three interest rate cuts of last fall may have overstimulated the U.S. economy. He also questioned the level of U.S. stock prices.

"The Federal Reserve must continue to evaluate, among other issues, whether the full extent of the policy easings undertaken last fall to address the seizing-up of financial markets remains appropriate as those disturbances abate," the Fed chief said.

On the subject of stock valuations, Greenspan said: "Equity prices are high enough to raise questions about whether shares are overvalued."

"The Fed chairman somewhat surprised people with his stronger views that stock prices could be overvalued and if there is a decline later in the year it could hurt the economy," said David M. Jones, chief economist at Aubrey G. Lanston Co. Inc.

"He did recognize the possibility that in his three rate cuts last year he may have overstimulated the economy, that he may have overdone it."

Greenspan appears before the House Banking Committee Wednesday in the second leg of his testimony.

Despite the mixed tone of U.S. stocks, the bond market sold down on Greenspan's remarks. The prospect that the Fed may need to "take back" some of last fall's easing was especially hurtful to short-term issues. The 30-year Treasury fell 29/32, to yield 5.416 percent.

Trading volume, which had started off strongly, finished below average for the 11th consecutive day. Still, Tuesday's activity was the busiest in seven sessions on the Big Board floor and 7 percent above Monday's figure. It totaled 769 million shares. Nasdaq volume came to 906 million shares.

Interest-sensitive utility shares headed lower in tandem with the bond market.

The technology sector sped higher for the fourth day, energized by another shining performance from Internet and bellwether computer-related names.

Web-related shares powered up after Morgan Stanley Dean Witter analyst Mary Meeker termed the long-term outlook "phenomenal" for some of the group's stalwart names. eBay (EBAY) was ahead 3 7/8 to 282 5/8, Yahoo! (YHOO) 7 1/8 to 152 7/8, and Amazon.com (AMZN) 8 11/16 to 115 3/16. Meeker, speaking to her firm's sales eam, said she sees the companies posting good numbers in the current quarter.

In Tuesday's market indicators:

• The Standard & Poor's 500 Index fell 0.1 percent.
• New York Stock Exchange losers held the upper hand by a 17-to-13 margin over winners. In the Nasdaq Stock Market, declining stocks edged risers by 20 to 19.
• The Russell 2000 Index of small-company stocks gained 0.3 percent.

• Microsoft (MSFT) added 6 5/8 to 155 7/16. Morgan Stanley's Meeker said she doesn't see the company's courtroom battle with the U.S. government as having an adverse impact on its future growth.
• Other bellwether computer-related issues continued their impressive snapback from a two-week fall that saw a number of the stocks drop over 20 percent. Data storage specialist EMC improved 3 15/16 to 108 1/8, Dell Computer rallied 2 3/16 to 87 1/16, Gateway climbed 3 3/16 to 82 1/2, Oracle put on 3 15/16 to 58 1/2, and Compaq Computer tacked on 1 7/16 to 44 1/8.
• America West Holdings (AWA) declined 3 1/4 to 18 1/8. The airline ended talks with UAL (UAL), the parent of United Airlines, regarding a possible sale. It will stay independent.
• Starbucks (SBUX) added 2 1/2 to 52 3/8 on word that the coffee purveyor plans a two-for-one stock split.
• Home electronics retailer Best Buy (BBY) picked up 5 3/16 to 95 3/16. It, too, hatched plans for a two-for-one split of its shares.
• Nordstrom (NOBE) checked in with fourth-quarter earnings of 47 cents a share, matching most analysts' estimates according to earnings compiler First Call Corp. But the shares pulled back 2 3/16 to 41 11/16 after the department store operator revealed that sales at stores open a year or more dropped 5.4 percent in the quarter.
• Micron Technology (MU) rose 2 3/16 to 70 5/16. Donaldson, Lufkin & Jenrette fattened its rating of the manufacturer of memory chips to "buy" from "market perform," setting a 12-month price objective of $100 on the shares. The broker believes the recovery in prices of dynamic random access memory chips "has staying power."
• Verisign (VRSN) was ahead 11 3/8 to 108 1/2. The Internet security expert signed a multiyear deal with Netscape Communications to promote secure electronic commerce and communications solutions on corporate networks and the Web.
• Bright Horizons (BFAM) lost 3 1/4 to 21 after tallying 13 cents a share in profits in the fourth quarter, equaling most analysts' estimates according to First Call Corp. Brokerage firm Jefferies lowered its opinion to "hold" from "accumulate." The company provides child care services to the working environment.