NEW YORK — Profit-taking sent stocks modestly lower Monday as Wall Street rested after three weeks of healthy gains in the high-tech sector. An earnings warning from Dell Computer had little effect on the markets.
“We’ve had a pretty fabulous run since the Fed initially lowered rates on Jan. 2. Stock prices have done well,” said Steven Goldman, market strategist at Weeden & Co. “There was some bad news today, but investors appear to be looking ahead, instead of focusing on the rear-view mirror and bad earnings news for this last quarter.”
Dell, which fell 13 cents to $25.50, became the latest high-profile technology company to lower its earnings forecast because of the slowing economy and slumping consumer confidence.
So far this year, the market has had little reaction to similar warnings, reflecting many investors’ belief that weak earnings were already priced into stocks, and Monday’s trading continued that trend.
The Federal Reserve’s decision to lower interest rates earlier this month – and expectations that it will lower rates again next week – have made investors more confident even as companies release disappointing earnings outlooks.
“Six months ago, the same news would have sent Dell down 25 to 30 percent, but its stock is already down,” said John Forelli, portfolio manager at Independence Investment Associates.
“I think investors are starting to feel like the bad news is factored into stocks.”
Tech stocks were mixed, with losses primarily coming from profit-taking.
“This is part of the rotation that we’ve been seeing. Financial, utility and health care stocks are rebounding somewhat today after spending the first part of the year down,” Forelli, the Independence Investment manager, said. “It’s catch-up time now for some of these groups, so we’re seeing tech a little down as that happens.”
— The Associated Press
Manufacturing and retail stocks gained as well, with 3M rising $2.13 to $108.88 and Sears gaining $2.92, or more than 8 percent, to reach $36.60.
And Amgen shot up nearly 13 percent, gaining $7.63 to $67.63, on a court ruling that preserves the biotech company’s monopoly on its top-selling drug, Epogen.
Also Monday, a key gauge of U.S. economic activity plunged 0.6 percent in December, signaling continued weakness in the U.S. economy. The news from the New York-based Conference Board’s Index of Leading Economic Indicators was taken as yet another sign that the economy is slowing, giving the Fed more reason to lower rates.
Advancing issues outnumbered decliners about 7 to 5 on the New York Stock Exchange. Consolidated volume came to 1.40 billion shares, compared with 1.68 billion Friday.
The Russell 2000 index was up 2.06 at 490.15.
Overseas, stocks were higher. Japan’s Nikkei stock average rose 0.3 percent, as did Germany’s DAX index, up nearly 0.4 percent. Britain’s FT-SE 100 also gained nearly 0.4 percent, and France’s CAC-40 was up 0.6 percent.
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