Tech Stocks Drop Again
Technology stocks tumbled for a third consecutive session and the Dow rose Wednesday as investors pulled money from tech stocks and put them into industrials.
The technology-dominated Nasdaq composite index fell 189.22 to close at 4,644.67. Seven Nasdaq stocks fell for every three that rose.
The Dow Jones industrial average rose 82.61 to close at 11,018.72.
The Nasdaq's poor showing was due to investors once again collecting profits from the recent rally in high-tech stocks.
"There's some carryover concern that a lot of these stocks are overvalued," said Barry Berman, managing director of equity trading for Robert W. Baird & Co. in Milwaukee. "So there's money coming out of stocks that are highly priced relative to earnings and into some groups that had been ignored for a long time."
Selling was exacerbated Tuesday after Goldman Sachs investment strategist guru Abby Joseph Cohen said she no longer recommended an overweighted position in the technology sector.
"It's the end of the quarter and maybe tech is not going to be quite as dynamic a leader in the market as it has been," said Bill Rhodes, chief investment strategist at The Williams Capital Group.
Since the Nasdaq composite index reached its last record high close on March 10, the index has fallen about 8 percent.
Market watchers consider a decline of 10 percent a correction, which signifies a downturn in a rising market but not necessarily a long-term change.
The Internet sector was the hardest hit. The Amex Internet Index fell 5 percent, and the 17-stock Goldman-Sachs Internet Index plunged 7.5 percent.
On the other hand, oil stocks rose after OPEC oil ministers agreed on production increases to boost the world's crude oil supplies. Analysts forecast improved profit margins for oil companies, helping the sector gain ground even as prices of crude oil tumbled on world markets.
Wednesday marked the first anniversary of the Dow's first close above 10,000.
Since then, the blue-chip index has risen as much as 13 percent above the mark and has dipped back below it several times. With Wednesday's advance, the Dow is about 10.2 percent above 10,000.
Advancing issues outnumbered decliners by a 6-to-5 margin on the New York Stock Exchange, where composite volume totaled 1.28 billion shares, compared with 1.16 billion in the previous session.
Broader stock indicators were mixed. The Standard & Poor's 500 rose 0.79 to 1,508.52. The Russell 2000 index, which measures the performance of smaller companies, dropped 16.61 to 543.00.
Overseas, Japan's Nikkei stock average rose 1.6 percent. Germany's DAX index fell 0.9 percent, Britain's FT-SE 100 fell 0.8 percent, and France's CAC-40 fell 0.3 percent.