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U.S. Stocks Pull Back

A rally on Wall Street Tuesday faded amid earnings concerns about the technology sector, bringing major market averages mildly lower.

The Dow Jones Industrial Average declined 33.85 points, or 0.3 percent, to 9,693.76.

The Nasdaq Composite fell 4.68 points, or 0.2 percent, to 2,392.94. Intel, buffeted by speculation that it might announce a sales shortfall for the first quarter, shed 4 5/16 to 115 5/16. It comprises the second-biggest weighting within the Composite, surpassed only by Microsoft.

The big concern among tech investors is that more companies will preannounce earnings shortfalls before first-quarter profits reports are presented in their entirety in April. Recently, Dell, Hewlett-Packard, Compaq, 3Com, and CompUSA have all indicated, directly or otherwise, that growth may slow in the months ahead. And late Monday, chipmaker Advanced Micro Devices warned of worse-than-expected first-quarter results.

Once again, the breadth of the market was negative, with winners yielding to losers by a 17-to-13 margin on the New York Stock Exchange.

"One of the results of a market with narrow breadth is that, as everyone piles into the favored few stocks, the indexes can continue to move higher," said Terence Gabriel, stock market analyst at I.D.E.A., noting that a relative handful of stocks make up the lion's share of the popular averages.

"On a very short-term basis, you have a lot of people chasing Microsoft, the largest capitalized stock on the U.S. stock market," Gabriel continued. "And if Microsoft goes up 5 to 6 points a day, you can still get the indexes moving higher given the way that they're constructed."

There was little major news to move prices Tuesday. Economic and earnings calendars were skimpy, so investors sought clues from a speech by Federal Reserve Chairman Alan Greenspan on the Fed's views on monetary policy.

Meanwhile, the results of an SG Cowen/Datamation survey dampened demand for a few computer makers. The report's findings pointed to a decline in corporate North American PC unit sales in 1999. Dell Computer (DELL) fell 1 5/16 to 44 1/16. Cowen analyst Richard Chu cut his rating to "buy" from "strong buy," though he noted the company possesses a "terrific business model."

Also, Compaq Computer shed 1 9/16 to 32 13/16 and Hewlett-Packard eased 2 3/16 to 67 11/16.

But International Business Machines (IBM) picked up 3 5/16 to 182 3/16. PaineWebber analyst Don Young repeated his "buy" recommendation after meeting with Big Blue's head of server development.

AMD (AMD) fell 1 7/16 to 17 1/2. The manufacturer of microprocessors said it's on track to post a "significant loss" in the first quarter. AMD tied the outlook to an inability to meet its objective of shipping 5.5 million units of its K6 processors during the quarter. Also, the company will eliminate 300 positions over the next two quarters.

Other chipmakers gave ground, with NovelluSystems off 5 1/4 to 56 5/8, Applied Materials down 4 3/8 to 58 7/8, Linear Technology 2 13/16 lower to 45 3/8, and Texas Instruments falling 5 15/16 to 99 1/16.

In Tuesday's market indicators:

  • The Standard & Poor's 500 Index fell 0.2 percent.
  • On the Big Board floor, turnover came to 797 million shares, 12 percent more than Monday's pace.
  • Advancing issues lagged decliners by 11 to 8 in the Nasdaq Stock Market. Volume totaled 1.02 billion shares.
  • The Russell 2000 Index of small-capitalization stocks sank 0.2 percent.
  • In the bond market, the 30-year Treasury rose 27/32, to yield 5.529 percent.

Among the companies in the news:
  • Microsoft (MSFT) rose 2 13/16 to 161 13/16 after the Seattle Times reported that the government and the software kingpin are considering ways to settle the antitrust lawsuit before the trial resumes on April 12.
  • Lycos (LCOS) leaped 12 3/8 to 96 1/4. The Internet portal said it remains fully committed to its transaction with USA Networks to create USA/Lycos Interactive Networks.
  • ValueVision International (VVTV) was ahead 1 3/8 to 11 1/2. The direct marketer, NBC, and GE Equity entered into a strategic alliance designed to help increase the cable distribution of ValueVision's television home-shopping network. The companies will also explore the development of future Internet and e-commerce opportunities.
  • RJR Nabisco (RN) was unchanged at 28 5/8. It will sell its overseas tobacco operations to Japan Tobacco Inc. for $8 billion including the assumption of $200 million of debt.
  • H.J. Heinz (HNZ) dipped 1 1/8 to 50 7/8. The food processor earned 60 cents a share on an operating basis in the fiscal third quarter. That was what most analyts had predicted according to earnings compiler First Call Corp. Heinz said it's on track to meet 1999 earnings expectations and believes it can achieve profits growth of 10 percent to 12 percent annually over the next four years.
  • Nextel Communications (NXTL) rose 2 5/8 to 31 7/16 on takeover speculation sparked by the wireless telephone company's chief technology officer ducking out of an appearance at a BT Alex. Brown technology conference.
  • (PCOR) gained 4 1/2 to 54 1/4. The provider of electronic commerce technology and content for the computer industry is partnering with to launch, an online store for computer products. The site offers prices on over 150,000 computer products.
  • RoweCom (ROWE) vaulted 8 1/2, or 53 percent, to 24 1/2 in its market debut. The company builds online bookstores and libraries that employees of RoweCom's corporate clients can access. RoweCom sold 3.1 million shares at $16 each, above the original $12-to-$14 range listed in the company's filings.